1.Production and factors of production

Question 1

What is production?

Answer 1

Production is the process of converting raw materials into good or services to satisfy human needs and wants, mainly with the motive of making profit.

Question 2

What is the difference between goods and services?

Answer 2

Goods are tangible while services are intangible. Goods are separable, services are not. Goods are storable but services cannot be stored for later use. Goods are durable.

Question 3

What is the difference between needs and wants?

Answer 3

Needs are essential but wants are not. Needs are basic requirements but wants are ways of satisfying needs. Needs are limited but wants are unlimited. Needs cannot be created but wants can be created.

Question 4

What are the factors of production?

Answer 4

Land
Labout
Capital
Enterprise

Question 5

What are the two types of capital and explain?

Answer 5

Working capital/circulating capital is resources used in production such as raw materials and components.

Fixed Capital is the stock of man-made resources, such as machines and tools used to help make goods and services.

Question 6

Who is an entrepreneur?

Answer 6

An entrepreneur is the starter of an enterprise, the risk taker, the organizer of the factors of production, and the idea generator.

Question 7

What is manufacturing?

Answer 7

manufacturing is the process of making goods out of raw materials.

Question 8

What are the three types of goods and explain?

Answer 8

Consumer goods- Goods produced for final consumers.
Intermediate goods- Components produced that may be used by other manufacturers.
Capital goods- Tools and equipment produced to be used by other manufacturers.

Question 9

What are the two types of services?

Answer 9

Direct/personal services- Provided directly to consumers
Indirect/auxiliary/supportive services- Provided to support business activities and trade.