Main economic groups and factors of production

Question 1

Define a consumer

Answer 1

A person or organisation that directly uses a good or service

Question 2

Define a producer

Answer 2

A person, company or country that makes, grows or supplies goods and/or services

Question 3

Define a government

Answer 3

A political authority that decided how a country is run and manages its operation

Question 4

Define a good

Answer 4

A tangible products e.g. a product that can be seen or touches

Question 5

Define a service

Answer 5

An intangible product e.g. a product that cannot be seen or touched

Question 6

Define a profit

Answer 6

The amount of money a producer has left after all costs have been paid.

Question 7

Define factors of production

Answer 7

The resources in an economy that can be used to make goods and services e.g. land, labour, capital and enterprise.

Question 8

Define land

Answer 8

The natural resources available for production in an economy.

Question 9

Define capital

Answer 9

The man-made aids to production in an economy.

Question 10

Define labour

Answer 10

The workforce available for production in an economy.

Question 11

Define enterprise

Answer 11

The factor of production that involves taking a risk and organising the other three factors in production.

Question 12

What are the 3 main economic groups?

Answer 12

Consumer, producers and government

Question 13

What do the factors of production affect?

Answer 13

The quantity and quality of output

Question 14

What is land?

Answer 14

Raw materials that are naturally occurring (e.g. oil, trees, the sea, soil)

Question 15

What is labour?

Answer 15

The workforce

Question 16

What is capital?

Answer 16

Different types of machines and infrastructure (e.g. roads that are used during the manufacture of other goods and services.)

Question 17

What is enterprise?

Answer 17

They function performed by entrepreneurs. They organise the other factors of production to create goods and services.

Question 18

What is the role of consumers?

Answer 18

• Consumers are the buyers of goods and services.
• They are influenced by how much benefit they will gain from a good.
• This enables consumers to put a price on how much they value it.
• To make sensible decisions on the value of a good, consumers need to have information about the goods available and the ability to understand this information.

Question 19

What is the role of producers?

Answer 19

• Producers are the sellers of goods and services.
• They are influenced by how much benefit (e.g. profit) they receive from a good.
• In order to maximise profit, suppliers choose what and how they produce. This can affect quantity, price and quality of goods produced.

Question 20

What is the role of the government?

Answer 20

• A group of people who have the power to run a country.
• They are influenced by wanting the best for society.
• The government can impact the whole economy by its policies (e.g. changing the level of unemployment benefit.)
• The government can impact the market for specific goods and services (e.g. by adding tax)
• Governments spend money in an economy (e.g. providing services such as healthcare, transferring money directly to individuals such as child benefits.

Question 21

What groups are interdependent and how does this affect the economy?

Answer 21

• There is interdependence between consumers, producers and government.
• This means the economic actions of one group is likely to impact another.
• This linking between the different groups is a key area to consider when thinking about what might happen after any change in an economy.