Chapter 2 - Factors of Production Flashcards
(19 cards)
What are factors of production?
The inputs needed to produce goods and services.
What is geographical mobility?
The ability of factors to move from one location to another.
What is occupational mobility?
The ability of factors to move from one job to another.
What is land?
Land is a natural resource that includes a wide range of things, such as mineral deposits (coal, oil), the earth, and the sea.
What are the properties of land?
- A free gift of nature that is inelastic in supply.
- No geographic mobility.
- Heterogeneous in nature.
- The reward for land is rent.
- Has occupational mobility.
What can be done to improve the quantity of land (5)?
- Increasing rent.
- Discoveries of fossil fuels and minerals.
- Utilization of previously unused natural resources.
- Planting and growing more trees and plants.
- Applying the 3R techniques.
What can be done to improve the quality of land (3)?
- Using fertilizers.
- Better land management.
- New technology.
Elaborate on capital.
- Is man-made.
- The reward for capital is interest.
- Can be improved through advancements in technology.
- Can decrease in value due to depreciation (wear and tear).
What is physical capital?
Any machine/building used to produce more usable things. Eg: Factory, computer.
What is human capital?
Any sort of skill/knowledge that helps to create usable things. Eg: Education, experience.
What is a capital good?
A good used to produce another good.
What is a consumer good?
A good that is consumed directly by a consumer.
What are durable goods?
Durable goods are goods that can last a long time.
What are non-durable goods?
Non-durable goods are goods that are perishable.
What is a consumer service?
An intangible product offered to households and not businesses.
What is the mobility of capital?
The mobility of capital varies according to the type of capital. Eg: Photocopier (geographical mobility), coal mine (occupational mobility).
What can be done to improve the quantity of capital (3)?
- Investment
- Depreciation
- A decision by producers to produce more consumer goods.
- Net investment = Gross investment (total) - depreciation
What is the formula for net investment?
Net investment = Gross investment (total) - depreciation
What can be done to improve the quality of capital (2)?
- Research and development
- The speed and accuracy of modern equipment and advanced technology.
