Factors of production

Question 1

Name the factors of production

Answer 1

Land
Labour
Capital
Enterprise

Question 2

Define land

Answer 2

Natural resources in an economy

Question 3

Define labour

Answer 3

Human resources available in an economy

Question 4

Define capital

Answer 4

Physical resources made by humans that aids the production of goods and services

Question 5

Define enterprise

Answer 5

Involves organising production and taking risks

Question 6

What is the difference between human capital and physical capital

Answer 6

Human capital is the value of labour to the productive potential of an economy
Physical capital is the factors of production such as machinery, bulidings and infrastructure

Question 7

What are the rewards for each factor of production

Answer 7

Land: Rent
Labour: Wages
Capital: Interest
Enterprise: Profit

Question 8

Define specialisation:

Answer 8

Process by which inividuals, firms and economies concentrate on producing those good and services where they have an advantage over others

Question 9

Give advantages and disadvantages of specialisation

Answer 9

Allows individuals to concentrate on what they are best at doing, meaning more goods and services will be produced

Major expansion in global living standards

No one is self sufficient

Pace of technological changes means there is always possibilities that specialist skills and experiences that one has acquired may become redundant

Changes in consumer wants can mean sometimes certain goods and services are no longer needed, unemployment is a result

Question 10

Define division of labour

Answer 10

Where a manufacturing process is split into a sequence of individual tasks