Factors of production Flashcards
What are the 4 factors of production?
Land, labour, capital and enterprise
What do entrepreneurs do?
Bring together the factors of production in order to make a profit
What is physical capital?
Goods that can be used in the production process
Give examples of fixed capital
Machines and buildings
Give examples of working capital?
Finished or semi-finished consumer goods
What are the rewards of capital?
Interest from the investment
What is entrepreneurship?
Managerial ability. An entrepreneur takes risks, innovates and uses the factors of production. They draw resources together in the production process
What is the reward for entreprenuership?
Profit
What is land?
Natural resources like coal, oil, wheat and water. It can also be physical space for fixed capital
What reward does land provide?
Rent
What is labour?
Human capital; the workforce of the economy
What is the reward for labour?
Wages
