Factors of production

Question 1

What is a resource?

Answer 1

A resource is a service used to produce goods and services that meet human wants.

Question 2

What is ‘factors of production’?

Answer 2

Factors of production are the resources employed or used to produce goods and services.

Question 3

What are the different types of ‘factors of production’?

Answer 3

Land, Labour, Capital & Enterprise.

Question 4

What is ‘land’?

Answer 4

All natural resources provided by nature which are used in production. (The payment for the land owner is rent.)

Question 5

What is ‘labour’?

Answer 5

Labour covers all human efforts both mental and physical, involved in producing a good. (The payment for labour is wages.)

Question 6

What are the categories of ‘labour’?

Answer 6

The categories are Skilled, Semi-Skilled & Unskilled.

Question 7

What is ‘capital’?

Answer 7

Capital is any human-made goods used to produce other goods and services. Examples: Office, Factories, machinery & tools. (The payment for capital is interest.)

Question 8

What is ‘enterprise’?

Answer 8

This is the decision making and risk-bearing in business by an entrepreneur. (The reward for enterprise is profit.)

Question 9

What does an entrepreneur do?

Answer 9

An entrepreneur organizes other factors of production.