Chapter 3 : Factors of production

• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Capital


  Physical: goods which can be used in the production process. Fixed: Machines; buildings. Working: finished or semi-finished consumer goods
• Entrepreneurship


  Managerial ability. The entrepreneur is someone who takes risks, innovates, and uses the factors of production. Resources are drawn together into the production process.
• Reward/Incentive for Capital


  Interest from the investment
• Reward/Incentive for Entrepreneurship


  Profit- an incentive to take risks
• Land


  Natural resources such as oil, coal, wheat, water. It can also be the physical space for fixed capital.
• Labour


  Human capital, which is the workforce of the economy.
• Specialisation


  When each worker completes a specific task in a production process