Section 1.2 Factors of Production Flashcards
What are factors of production?
The economic resources of land, labour, capital and enterprise
What is land? (factor of production)
Land is all the natural resources used in producing a good or service
Example: water, land, ocean, fish
What is labour? (factor of production)
Human effort used in producing a good or service
What is capital? (factor of production)
Human made goods used in production
Example: Truck
What is enterprise? (factor of production)
Risk bearing and key decision making in business
Example: CEO
What are capital goods?
Human made goods used in production (NOT INVESTMENTS like it is in business studies)
What are consumer goods?
Goods and services purchased by households for their own satisfaction
What does occupationally mobile mean?
Capable of changing use/ Can be used for multiple purposes
What does geographically immobile mean?
Incapable of moving from one location to another location
Is land occupationally mobile?
Is land geographically mobile?
Land is occupationally mobile
Example; Farming land can be used to build houses
Land is not geographically mobile
Example: You can’t move Sri Lanka back to India
Is labour occupationally mobile?
Is labour geographically mobile?
It depends on the workers, some may find it difficult to move from area to area and from one type of job to another.
What causes geographical immobility of labour?
- Differences in price and availability of housing in different areas and countries
- Family ties
- Differences in education systems in different countries
- Lack of information (people with poorly paid jobs may be unaware of job opportunities in other areas)
- Restriction on the movement of workers (work visa)
Is capital occupationally mobile?
Is capital geographically mobile?
It depends of the type of capital good. For example, a delivery van can be used to deliver food or toys (occupationally mobile).
For example, a copywriter in a bank can be moved to another area however a mine or a dock cannot (geographically mobile).
Is entreprise occupationally mobile?
Is entreprise geographically mobile?
It depends on the mobility of the entrepreneurs. However most of the time entreprise is both occupationally and geographically mobile.
What factors affect the quantity of labour?
- The size of the population
- The age structure of the population
- The retirement age
- The school leaving age
- Attitude to working women
What is the labour force?
People in work and those actively seeking work
What factors affect the number of hours people work?
- The length of the average working day
- Whether the workers work full-time or part-time
- The duration on overtime
- The length of holiday
- The amount of time lost through sickness
What is productivity?
The output per factor of production in a given amount of time
What is labour productivity?
Output per worker hour
What is output?
Goods and services produced by the factors of production
How can you increase the quality of labour?
Better education, training and healthcare
What are investment?
Is the money spent on capital goods
What is gross investment?
Total spending on capital goods
What is depreciation (capital consumption)?
The value of capital goods that have worn out or become obsolete
What is net investment?
Gross investment minus depreciation
What is negative net investment?
A reduction in the number of capital goods caused by some obsolete and worn out capital goods not replaced (gross investment lower than depreciation)
What increases the quality of capital?
New technology
How can you increase the quantity of entreprise?
- Quantity of the entreprise will increase when there are more entrepreneurs
- Good education
- Lower taxes on firms
- Reduction in government regulations
How can you increase the quality of entreprise?
- Better education
- Better training
- Better healthcare
- More experience
