Factors Of Production Flashcards
What is factors of production
Factors of production is an economic term that describes the inputs used in the production of goods and services in the order to make an economic profit
What is land
Land refers to all free gifts of nature.
It can be defined as all the services available naturally whether its above on or beneath the surface of the earth
What is the four factors of production
Land labour capital enterprise
Whats beneath the earth’s surface
Bauxite and petroleum
The three factors that distinguish land from the other FOP’s
1 . It is fixed in supply
2 . Land has no cost of production
3 . Land us geographically immobile
What is labour
Labour refers to those people who are available for work in an economy.
What is the characteristics of labour
- It is human factor
- Only the worker himself can sell his labour service.
- Labour service cannot be stored in the same manner as land or capital
Labour is more ____than land
Geographically and more occupationally more mobile
Is labour homogeneous
No labour is not homogeneous
What is division of labour
Division of labour is where the production process is divided into a series of separate tasks
When does specialization occurs
Specialization occurs when workers focus on a specific task and so become skilled in that area
What is the labour force
The labour force is the number of people willing and able to work in the economy
What is the supply of labour
The supply of labour is the total numbers of hours that they are willing to work.
Supply of labour is dependent on three factors , what are they?
- Size of population
- Proportion of the population
- Number of hours worked by each individual
What is capital
Capital refers to goods that are used to produce other goods and services.
Characteristics of capital
- They are man made
- Units of the same type of capital are homogeneous unlike labour
3 . Capital can be imported from other countries
What is resource allocations
Resource allocations is the act of dividing up the scarce resources of the economy to provide different goods and services to meet the needs and wants of society
What are the three questions to be answered when doing allocating resources
What to produce
For Whom to produce
How to produce
What to produce
Firms and government must decide what goods and services are to be produced
How to produce
Firms and government must decide how the goods and services will be produced
For whom to produce
Should firms produce goods and services based on people’s ability to pay? Or should the goods produced be shared amonst members of society by the government
What is an economic system
An economic system is a country’s answer to the problem of society and there attempts to allocate scarce resources
How many basic concepts of an economic system are they
6
What are the 6 basic economic system components
1 . Ownership of resources 2 . The role of private profit 3 . Allocation of resources 4. Ownership of production units 5 . Degree of freedom of choice 6 . The role of government
