Factors of production Flashcards
(19 cards)
What is production?
Productions is the process of turning inputs like raw materials or ideas into goods and services.
What are the factors of production?
- Land
- Labour
- Capital
- Enterprise/Entrepreneurship
What is ‘land’ as a factor of production?
All the natural resources on earth including the sea and atmosphere
What is ‘labour’ as a factor of production?
The human resources that are needed to produce goods and services
What are the three types of labour?
- Skilled
- Semi-skilled
- Unskilled
What are some factors affecting the labour supply?
- Wage rate
- Hours of work
- Size and structure of population
What is productivity?
The rate at which goods are produced (efficiency of production).
What factors affect productivity?
- Education and Training
- Motivation
- Working Conditions
What is capital in production?
The money and assets used in the process of production
What are the types of capital?
- Working Capital
- Fixed Capital
- Venture Capital
What is working capital?
Items required for the day-to-day operation of the business, like raw materials and cash.
What is fixed capital?
Long lasting items that are used in production, like buildings or machinery
What is venture capital?
Money invested in a new or growing business with high risks and potentially high returns.
What role does capital play in production?
Money used for the operations of a business, buying equipment, raw materials and paying wages
What does the amount and type of capital a firm uses depends on?
The size and type of industry
What is enterprise/entrepreneurship in production?
The ability to coordinate and combine the factors of production to run the business.
What are some of the functions of an entrepreneur in production?
- Creation of ideas
- Takes the initiative and risks
- Determines what, for whom, and how much to produce
What are the benefits of being self-employed?
- Receives all profits
- You can work on your own time
- Makes all decisions and reports to no one
- Close personal relationship with clients
What are the problems of being self-employed?
- Bears all losses
- Works long hours
- May not always get a salary
- May find it difficult to acquire loans
