Factors Of Production Flashcards
What are factors of production?
A term that describes the inputs that are used to create commodities or services.
What is the definition for land in factors of production?
The land which the entrepreneur owns which they get their natural resources from, e.g farms. The entrepreneur will use these resources to create a commodity.
What is the definition for labour in factors of production?
The people who get the resources from the land, the employees under the entrepreneur.
What is the definition for capital in factors of production?
The machinery or commodities used to make a good or service.
What is the definition for entrepreneurship in factors of production?
The person who combines all these factors together to make a good using personal capital.
What is the opportunity of the production of goods?
There will always be an opportunity costs when producing goods, the cost being a trade-off between producing more capital or more consumption goods. This trade-off is critical because without one you cannot produce another.
What is the reward for land in factors of production?
The reward for land is the rent paid on the land.
What is the reward for labour in factors of production?
The reward for labour is the wages paid to the workers.
What is the reward for capital in factors of production?
The reward for capital is the interest on the liabilities.
What is the reward for enterprise in the factors of production?
The reward for enterprise is the profit made by the sale of the business commodities.
What can these factors of production rewards be called?
Outputs.
What are the rewards for the factors of production otherwise known as?
Factor incomes.
