Chapter 3- Transforming Resources into Goods And Services Flashcards
What are the factors of production?
Land, labour, capital and enterprise.
What are “resources” (or inputs)?
The elements that go into producing goods and services.
How to improve efficiency of the factors of production?
- improving fertility of land: greater output per acre. And livestock farming.
- using renewable or recyclable resources
- greater education and training of the workforce: labour
- increasing the level of investment in capital equipment:enhance efficiency of labour force.
- improvements in entrepreneurial skills
What is meant by the term “production”?
The process whereby resources (factors of production) are converted into a form that is intended to satisfy requirements of potential customers.
What is meant by the term “output”?
The finished products
What must a firm ensure when going through the ‘transformation process’?
They must be careful to not overuse the resources as this may lead to lower levels of efficiency in the future.
What is meant by the term “Primary Sector”?
Those organisations involved in extracting raw materials (e.g: farming, fishing, forestry and extracting industries…).- natural resources
It can be expensive to go through.
What is meant by the term “Secondary (manufacturing) Sector”?
Those organisations involved in processing or refining the raw materials from the primary sector into finished or semi-finished products (e.g: textiles manufacturers, food processors)
They may act as inputs for other businesses who produce more complex end product.
What is meant by the term “Tertiary Sector”?
Those organisations involved in providing services to customers and to other businesses, in either public or private sector. (E.g: health, education)
What is meant by the term “Feedback”?
It is the final of the transformation process.
Feedback of information is used to adjust the process in the future.
What does “GDP” mean?
GDP means Gross Domestic Product.
It is the total value of a country’s over the course of a year.
What is meant by the term “Value Added (added value)”?
Sales revenue minus the cost of bought-in materials, component and services.
What is meant by the term “Adding Value”?
The process of increasing the worth of resources by modifying them.
What is meant by “USP”?
Unique selling point/proposition.
A feature of a product or service that allows it to be differentiated from other products.
What can a firm do to add value?
- bringing product within easier reach for customers by retailing and distribution
- creating a USP
- identifying an attractive mix of design, function, image and service