Factors of Production

Question 1

What are the four factors of production?

Answer 1

Land, Labour, Capital and Human Capital

Question 2

Define the land factor of production

Answer 2

Naturally occurring resources whose supply is fixed, [such as gold, water, physical space]

Question 3

Define the Labour factor of production

Answer 3

Physical human activity that provides the goods or services in a economy [such as miners, desk workers, retail workers]

Question 4

Define the Capital factor of production

Answer 4

Capital goods, real capital or capital assets that are already produced goods or any non-financial asset used in the production of goods or services [such as laptops used, a farmer’s tractor, ingredients]

Question 5

Define the Human Capital factor of production

Answer 5

The collective skills, knowledge or other intangible assets of individuals that can be used to create economic values for the individuals, their employers or their community [such as skills, investors, knowledge]

Question 6

What is a production possibilities graph?

Answer 6

A graph that shows alternative ways an economy can use it’s resources, showing how much production of a product would need to be sacrificed to increase production of other products