Factors of Production and their Rewards(Chapter 2)

Question 1

FOP

Answer 1

Factors of Production are the building blocks of the economy, they are scarce resources that are used in the production of goods and services to satisfy human needs and wants.

Land: Land refers to the natural resources found on Earth, including air, water, minerals, forests, and agricultural land. These resources are used in the production of goods and services.

Labor: Labor refers to the human effort, both mental and physical, exerted in the production of goods and services. It involves the skills, abilities, and work provided by individuals to contribute to economic output.

Enterprise: Enterprise refers to the entrepreneurial activities undertaken by firms and companies. It involves the organization and coordination of resources, including land, labor, and capital, to produce goods and services with the aim of making a profit.

Capital: Capital refers to the tools, equipment, machinery, and infrastructure used in the production process. It includes both physical capital, such as factories and vehicles, and financial capital, such as money and investments. Capital is utilized to enhance productivity and facilitate the creation of goods and services.

Question 2

Factor Rewards

Answer 2

Enterprise - Profit

Land - Rent

Labor - Wages

Capital - Interest

Question 3

Using resources in production(input, output, and producers)

Answer 3

Input- Natural resources
Output- goods and services
Producers- The people and organizations what make and sell these goods
E.g. table
Input- Wood
Output- Table
Producer- Home center

Question 4

Consumption

Answer 4

We consume goods and services when we use them to satisfy our human wants and needs. However, these resources are finite, we will be unable to satisfy all of our wants and needs. This can affect others as we use up these resources other will have less available. The total amount consumers spend on economic goods are called consumption expenditure