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2 The Factor of Production

Chapter 2 discusses the factors of production, which include land, labour, capital, and enterprise, and their roles in producing goods and services. It also explores the mobility of these factors, the influences on their movement, and the determinants of their quantity and quality. Additionally, the chapter addresses the rewards for factors of production and provides activities to identify and analyze economic resources.

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Lambert Wang
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21 views16 pages

2 The Factor of Production

Chapter 2 discusses the factors of production, which include land, labour, capital, and enterprise, and their roles in producing goods and services. It also explores the mobility of these factors, the influences on their movement, and the determinants of their quantity and quality. Additionally, the chapter addresses the rewards for factors of production and provides activities to identify and analyze economic resources.

Uploaded by

Lambert Wang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Chapter 2: The factor of production

Question:

1 Do we living better than before?

2 Better food? Better clothes? Better housing?

Factors of production
Resources: factors used to produce goods and services.

Factors of production is another term for economic resources


 Factors of production

• land It covers any natural resource which is used in production.


(coal, land, forest, sea, ocean, rive, fish)

• labour This includes both the mental and the physical effort,
involved in producing goods and services.
limited supply

• capital Capital is any human-made (manufactured) good used to


produce other goods and services.
(offices, factories, machinery, railways and tools)

• enterprise Enterprise is the willingness and ability to bear uncertain


risks and to make decisions in a business.
 Capital goods and consumer goods

Capital goods are not wanted for their own sake, but for what they can produce.
(human-made goods used in production.)

Consumer goods are wanted for the satisfaction they provide to their owners.
(goods and services purchased by households for their own satisfaction. )
 Mobility of the factors of production

occupational geographical

occupationally mobile It can be used for a number of purposes.

land

geographically immobile It hard to move land to another place


geographical immobility/mobility

• labour

occupational immobility/mobility

• Capital: The geographical and occupational mobility of capital varies according to the type
of capital goods.

• Enterprise: The mobility of enterprise depends on the mobility of entrepreneurs.

Why is it difficult for someone to move from one area of the country to another or
to switch from one type of job to another type?
 The influences on the mobility of factors of production

• Differences in the price and availability of housing in different areas and countries

• Family ties.

• Differences in educational systems in different areas and countries.

• Lack of information.

• Restrictions on the movement of workers. Housing, Family


Lack of information and skills
• Lack of appropriate skills and qualifications. Educational system, restriction
INDIVIDUAL ACTIVITY 2

The following is a list of economic resources.

In each case, decide whether the resource is an example of land,


labour, capital or enterprise:

a chemical fertiliser
b a school
c a lake
d the work of a nurse
e the initiative needed to set up and run a bicycle repair shop.
 Quantity and quality of the factors of production

The quantity and quality of land

The quantity and quality of labour

The quantity and quality of capital

The quantity and quality of enterprise


 Determinants of the quantity and quality of labour

The size of the population.

The age structure of the population.

• Quantity of labour The retirement age.

The school leaving age.

Attitude to working women.

• Quality of labour better education, better training, more experience and


better healthcare.
 Rewards for factors of production
Four-part question

a Identify two non-human factors of production. (2)

Land and capital.

b Explain two causes of an increase in the quantity of labour. (4)

An increase in the retirement age would increase the quantity of labour. [1] More people would
be in the labour force if they have to work to, for example, up to the age of 70 rather than 65 is
disfigured. The working age range would be expanded. [1]

There might also be an increase in the number of people within the existing working age group. [1]
This could be because of a rise in the birth rate that occurred 16 or more years earlier, more
people of working age coming to live in the country than working age people leaving to live in
other countries or a fall in the death rate. [1]
c Analyse why the mobility of labour may increase over time. (6)

The occupational mobility of labour may increase over time due to better education, appropriate
training and the provision of information about job vacancies. [1] If workers are better educated, they
will gain more qualifications and skills. [1] This will enable them to apply for a greater range of jobs
and will make them more attractive to employers. [1] Unemployed agricultural workers, for example,
could be trained in the skills needed to work in the tourism industry if there are vacancies in the
tourism industry, enabling labour to move from a declining to an expanding industry. [1]

Providing information about job vacancies can make workers aware of job opportunities more suited
to their skills and offering them better pay and working conditions. [1] This may encourage workers to
move from one occupation to another occupation. [1]

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