Unit 2

Question 1

Define Factors of Production.

Answer 1

The economic resources required for production of goods and services.

Question 2

What are the four Factors of Production?

Answer 2

Land, labour, capital, enterprise.

Question 3

Define Land as a FoP and give examples.

Answer 3

Natural resources available for production e.g land, forests, fishing, mining etc

Question 4

Define Labour as a FoP and give examples.

Answer 4

Human effort used in production. Example, a sweeper, a bank manager etc

Question 5

Define Capital as a FoP and give examples.

Answer 5

Human made goods used in production. Example machines, equipment, lorries etc

Question 6

Define Enterprise as a FoP

Answer 6

The willingness of the entrepreneur to bear risks and his ability to make decisions in a business.

Question 7

What is occupationally mobile?

Answer 7

Capable of changing use

Question 8

What is geographically mobile?

Answer 8

Capable of moving from one location to another

Question 9

What is occupationally immobile?

Answer 9

Incapable of changing use

Question 10

What is geographically immobile?

Answer 10

Incapable of moving from one place to another

Question 11

Is land mobile (occupationally and geographically?)

Answer 11

Most land is occupationally mobile (can be used for a number of purposes). In traditional sense, it is geographically immobile as a section of land can’t be moved from one place to another but some forms of land, example wildlife, are geographically mobile.

Question 12

Is labour mobile (occupationally and geographically?)

Answer 12

It varies. Due to various reasons, workers might not be able to move from one area to another (geographically immobile) or vice versa. They may find it difficult to switch from one job type to another (occupationally immobile) or vice versa.

Question 13

Is capital mobile (occupationally and geographically?)

Answer 13

Varies according to type of capital good. Some can be moved from one place to another while others cannot (geographical immobility) and some can be used for a number of reasons while others have specific purpose (occupational immobility)

Question 14

Is enterprise mobile (occupationally and geographically?)

Answer 14

Depends on mobility of entrepreneurs. The skills can be applied to number if industries so occupationally mobile. Business could successfully be started in another place too so geographically mobile.

Question 15

What is the quantity of land?

Answer 15

Physical land does not change much though soil erosion reduces agricultural land while land reclamation increases its supply. Other natural resources can change significantly for example forests Renewable resources are replaced by nature example wind power but non renewable can diminish in numbers if over exploited

Question 16

What is the quality of land?

Answer 16

Quality may increase or decrease due to various reasons eg fertilizers, drainage, pollution etc

Question 17

What is quantity of labour?

Answer 17

Influenced by number of workers available (determined by size and age structure of population, retirement and school leaving age etc) and number if house they work (determined by length of working day, part time or full time, duration of overtime, length of holidays etc)

Question 18

What is quality of labour?

Answer 18

Productive labour force can be achieved by better education, training, experience (carry out more tasks efficiently, complex work, more better quality output) and healthcare (concentration, strong for manual tasks etc)

Question 19

What is quantity of capital?

Answer 19

Influenced by investment and tends to decrease over time due to physically wearing out or becoming outdated. However, new capital goods replace these which are better.

Question 20

What is quality of capital?

Answer 20

Advances in technology enable capital goods to produce higher and better quality output.

Question 21

What is quantity of enterprise?

Answer 21

Increases with more entrepreneurs (good education, related degrees courses) and firms (govt incentives)

Question 22

What is quality of enterprise?

Answer 22

Can be improved it entrepreneurs get better education, training, experience and healthcare. Knowledge and understanding.

Question 23

What are the payments for each FoP?

Answer 23

Land: rent
Labour: wages or salary
Capital: interest
Enteprise: Profit

Question 24

Define labour force

Answer 24

People in work and those actively seeking work

Question 25

Define productivity

Answer 25

The output per factor of production in an hour

Question 26

Define labour productivity

Answer 26

Output per worker per hour

Question 27

Define output

Answer 27

Goods and services produced by Factors of production

Question 28

Define investment

Answer 28

Spending in capital goods

Question 29

Define Gross Investment

Answer 29

Total spending on capital goods

Question 30

Define depreciation (capital consumption)

Answer 30

The value of capital goods that have worn out or become obsolete.

Question 31

Define net investment

Answer 31

Value of extra capital goods made (gross investment minus depreciation)

Question 32

Define negative net investment

Answer 32

a reduction in number if capital goods caused by some obsolete and worn our capital goods not being replaced