Econ test chapter 1.2 (Factors of production)

Question 1

what are factors of production

Answer 1

the resources required to produce goods or services

Capital Enterprise Labour Land

Question 2

consumer goods

Answer 2

goods and services that are purchased by households for their own satisfaction

Question 3

labour productivity

Answer 3

output per worker hour

Question 4

output

Answer 4

goods and services produced by the factors of production

Question 5

labour force

Answer 5

people in work and those actively seeking work

Question 6

capital

Answer 6

the tools and equipment required in the production process such as: tools (robots), machinery (packaging machines), vehicles.

Question 7

Enterprise

Answer 7

The skills a business person requires to combine and manage the other factors of production

Question 8

Land

Answer 8

the natural resources required in the production process e.g wood, metal ores, agricultural produce

Question 9

Labour

Answer 9

the human resources required in the production process, including skilled and unskilled labour

Question 10

What are the rewards for land

Answer 10

Rent- income that comes from ownership of property (assets)

Paid by the tenants of the land resources

Question 11

Reward for labour

Answer 11

Wages and salaries- wages are paid on an hourly basis while salaries are paid a fixed amount per month

Question 12

Reward for capital

Answer 12

Interest- If interest rate is high, it becomes less worthwhile for businesses and households to borrow money for production purposes because the cost of borrowing is high and vice versa

Question 13

Reward for enterprise

Answer 13

Profit-The return for the enterpreneur’s good businesses ideas and running it.

Question 14

What can all rewards for CELL be summed up as

Answer 14

Income

Question 15

Mobility of land

Answer 15

might be used for various purposes e.g a vacant field can be used for growing crops or building a factory

Question 16

mobility of factors of production

Answer 16

the extent to which resources can be changed for one another in production process

Question 17

mobility of capital

Answer 17

equipment can be used for different purposes- e.g a factory can be used to manufacture cars or planes

Question 18

mobility of entrepreneurs

Answer 18

can also be mobile- e.g Elon musk went from founding paypal to Tesla

Question 19

What do both geographical mobility and occupational mobility both come under

Answer 19

labour mobility

Question 20

geographical mobility

Answer 20

the willingness and ability of a person to relocate from one area to another for employment

Question 21

Why are some not geographically mobile

Answer 21

-family ties and related commitments: some people may not want to relocate as they want to be near their family or friends.

-costs of living: between regions and countries, costs of living may be too high, meaning its uneconomical for a person to relocate

Question 22

occupational mobility

Answer 22

the ease with which a person is able to change between jobs

Question 23

What does the degree of occupational mobility depend on?

Answer 23

the cost and length of training required to change professions

Question 24

What helps labour occupational mobility

Answer 24

developing and training employees to improve their skillset as workers can perform a greater range of jobs

Question 25

The more __________ and __________ mobile workers are in a country, its international __________ and _________ growth tends to be greater

Answer 25

occupationally, geographically, competitiveness, economic

Question 26

quantity of land

Answer 26

The amount of physical land in existence

Question 27

What is an example of quantity of land changing

Answer 27

rainforests declining at a faster pace

supply of land reducing because of soil erosion or increasing through land reclamation

Question 28

non renewable resources vs renewable

Answer 28

resources that cannot be replenished and resources that can be used contantly

Question 29

How can renewable be turned into non renewable

Answer 29

if resources are exploited; used faster than they are replenished (over-fishing, over-hunting)

Question 30

Quality of land (examples of it changing)

Answer 30

-fertiilisers may be used to increase fertility of land
-health of fish can be improved if firms stop polluting

Question 31

Quantity of labour

Answer 31

number of workers available and the number of hours they work

Question 32

What can influence quantity of labour (explain)

Answer 32

-The size of population

-age structure of population

-The school leaving age

-attitude towards working women

-working hours

-age range of labour force

Question 33

How can more be produced with the same number of workers

Answer 33

if the workers become more skilled, leasing to an increase in labour productivity

Question 34

What does increase in labour productivity increase

Answer 34

a country’s output

Question 35

What does increase in quality of labour look like

Answer 35

carrying out more difficult tasks, working with more complex machinery and producing more and better products

Question 36

what influences quantity of capital

Answer 36

influenced by investment (spending on capital goods) which tends to increase over time

Question 37

Gross investment

Answer 37

The total value of the output of capital good produced

Question 38

depreciation/capital consumption

Answer 38

value of replacement capital (new capital that replaces old, worn out capital)

Question 39

net investment

Answer 39

the value of the extra capital goods made (the gross investment-depreciation)

Question 40

practical example of net investment

Answer 40

if a country produces 200 MIL capital goods in one year and there is a depreciation of 70 MIL the net investment is 130 MIL. the country will have more capital goods.

Question 41

what happens if gross investment is less than depreciation

Answer 41

it means that some of the capital goods taken out of use are not replaced- called negative net investment

Question 42

quality of capital

Answer 42

advances in technology enable capital goods to produce a higher output and a better quality of output.

e.g development of robotics in car production has increased the number of cars significantly

Question 43

how can quantity of entrepreneurs increase

Answer 43

a good education system, including university degree courses in economic and business studies.

lowering taxes on firms and less gov. reg. as it can encourage more people to set up businesses.

Question 44

quality of entrepreneurship

Answer 44

-receive better education, better education better training and more experience

Question 45

What causes change in quantity and quality of factors of production

Answer 45

demand or supply of CELL

Question 46

What can influence changes in the costs of production

Answer 46

-change in the national minimum wage: cost of labour increases

-subsidies and taxes

-government regulations

Question 47

how can taxes change the factors of production

Answer 47

taxes on a firm will increase the overall cost of production

lowering income taxes will create incentive to work, increasing quantity of labour

Question 48

what does government regulations do to the cost of production

Answer 48

increases it thus decreasing output

Question 49

what do subsidies do

Answer 49

help reduce production costs, thereby increasing output of goods and services for a firm.

Question 50

what will net migration of labour do

Answer 50

affect quantity of labour in the economy. The more the immigration, the quantity increases.

Question 51

what will increase quality of labour

Answer 51

improvement in education and healthcare.

Question 52

What will unfavourable weather conditions do?

Answer 52

reduce the supply of agricultural goods.