Professional Documents
Culture Documents
Factors of production
New inclusions
Land
A gift of nature Limited in supply Land is immovable The supply of land involves no opportunity cost
Agriculture Fishing and trapping Mining Water Fuel and energy Logging and forestry
Primary industries that take something out of the Earth or the sea can be referred to as extractive industries.
Labour (1)
All of the physical and mental (cognitive) work needed to produce goods and services. It is a human factor. Labour Supply is measured in terms of time (man hour)
Labour supply = no. of workers x no. of working hours per worker Size of population Size of working population No. of working hours
Labour (2)
population growth (by natural growth or immigration) monetary rewards import of labour from other countries retirement age (e.g. from 60 to 70) school leaving age (e.g. from 16 to 17)
Labour (3)
Labour productivity :
Labour (4)
Better education and training Other factors of production( quantity & quality) Better management or organization. e.g. division of labour Better working conditions Greater fringe benefits (housing allowances, medical care, bonus, meal..)
Labour (5)
Occupational mobility
Geographical mobility
Transport Social factors Economic conditions Political stability Immigration or emigration restrictions
Monetary / non-monetary rewards income of the present job (higher opportunity cost in changing job) mobility Specialization of skills mobility Licensing requirements mobility Higher age of workers mobility
Capital (1)
Man-made resources used for further production Examples: machines, raw materials, tools Features:
Capital (2)
Capital is the money invested in the business. (can be liquid or non-liquid)= Tangible Assets Intellectual property, the ideas or the talent of a business workforce, is a non-tangible form of capital.
Capital (3)
Financial capital consists of the funds that firms use to buy physical capital. The factors of production are the elements of physical capital.
Organisation / Entreprenuership
The human resource that organizes labour, land, and capital. Entrepreneurs come up with ideas about what and how to produce, make business decisions, and bear the risks that arise from these decisions.
Information
Accurate and usable information reduces business risk and can enhance profitability.
New technology
Management
Consists of the people who run the business and control or direct the factors of production . Allocates company resources and makes decisions that affect the operations of the business
Rent
Wages
Interest
To be continued.