factors of production chapter 3

Question 1

entrepreneur

Answer 1

an individual who seeks out new business opportunities and is willing to take risks

Question 2

factors of production 3 points

Answer 2

economists refer to the resources in an economy as the factors of production. also the means by which an economy produces a whole range of goods and services to meet the needs of its population. the owners of factors of production receive payments when the factors are used by others

Question 3

land 3 marks

Answer 3

all of the natural resources in an economy. quality and the quantity of land is important. quality of land is increasingly relevant in view of climate change

Question 4

labour 1

Answer 4

human resources available in an economy

Question 5

low income countries 1 point

Answer 5

economies where income per head was $1025 or less

Question 6

capital 3 points

Answer 6

physical resource made by humans that aids the production of goods and services. the quality and quantity is important, particularly in low income economies where essential services may be unreliable. the reward for using capital is the financial return that is earned or income if the capital resource is rented.

Question 7

enterprise 4 points

Answer 7

involves organizing production and taking risks. organizes the other factors of production so as to produce goods and services. refers to the ability and inventiveness of the entrepreneurs who are prepared to take risks. the reward of enterprise is profit

Question 8

why is quality and quantity of labour important

Answer 8

often large populations suffer from lack of a well trained and well educated work force especially in low income countries. some are unavailable for work because of they are underage or the have family or social reasons.
some countries have declining populations and rely on immigrant workers to do both skilled and unskilled jobs
quality of labor is essential for economic progress
reward for labour is the wage or earning paid for labor’s services. the payment received depends on the value of labour to whoever is hiring the labour.

Question 9

physical capital

Answer 9

factors of production such as machinery, buildings and infrastructure.

Question 10

economic growth 2 marks

Answer 10

in the short run, an increase in a country’s output and, in the long run, an increase in a country’s productive potential.

Question 11

lower middle income countries

Answer 11

countries where income per head was between $1026 and $3995 in 2018 (World Bank).

Question 12

human capital 3 points

Answer 12

the value of labour to the productive potential (future growth) of an economy. can apply to individuals as well as to the population as a whole. It covers the skills, knowledge and experience of labour that is being used to produce goods and services.

Question 13

difference between human capital and physical capital
2 points

Answer 13

The quality as well as the quantity of physical capital is often considered to be the most important source of economic growth in low-income and lower middle income countries. human capital can be seen as an investment by individuals, employers and the government to increase the future rate of economic growth.

Question 14

specialization 5 points

Answer 14

the process by which individuals, firms and economies concentrate on producing those goods and services where they have an advantage over others.

allows individuals to concentrate upon what they are best at doing, meaning more goods and services will be produced.

It becomes necessary to exchange or trade goods and services.

As an individual specializes, they will produce a surplus (more than their needs), which they can exchange for the surpluses of others.

Policies have to be adopted to deal with the economic and social problems that arise.

Question 15

advantages of specialization

Answer 15

resulted in a major expansion in global living standards.

Question 16

disadvantages of specialization (3 points)

Answer 16

The pace of technological change means there is always the possibility that the specialist skills and experience that any individual has acquired may become redundant as the economy develops.

Individuals need to be flexible and multi-skilled and to be able to move between occupations.

At regional and national levels, changes in consumers’ wants can sometimes mean that the goods and services produced in a region or country are no longer required in the same quantity, so unemployment can result.

Question 17

division of labour (2 points)

Answer 17

where a manufacturing process is split into a sequence of individual tasks. modern manufacturing units are usually split into a number of tasks.

Question 18

advantages of division of labour

Answer 18

allows workers to be more specialized and can lead to an increase in output per worker and an improvement in the quality of the finished product.

Question 19

disadvantages of division of labour (2)

Answer 19

often creates dissatisfaction among the workforce as they become de-skilled and bored with the repetitive nature of their work.

In high-income countries, the dehumanizing impact of production techniques, has been acknowledged and procedures introduced to counteract boredom such as moving workers around the production plant.

Question 20

role of entrepreneurs (3)

Answer 20

organize production by putting together the various factors of production to form a business opportunity

are prepared to take risks by using their own money or by borrowing from banks or other people to try to achieve their ambitions.

The risks are considerable and if their plans fail, they will lose their own money and that of others.

Question 21

qualities and skills of successful entrepreneurs (8)

Answer 21

leadership skills
decision making skills
anticipating current and future needs
identifying customer wants
good luck or good fortune
risk taking
Make a business opportunity by putting together factors of production
are creative and innovative