1.3

• Production definition

  Converts input or factor services into outputs of goods and services
• capital goods/producer goods definition

  a good which is used in the production of other goods or services
• consumer good definition

  a good which is consumed by individuals or households to satisfy their needs or wants
• what are economic resources?

  inputs used to produce goods and services, also called the factors of production:

  • land
  • labour
  • capital
  • enterprise
• factors of production definition

  inputs into the production process
• what is land as a factor of production?

  refers to the natural resources used in production, including physical land and raw material like oil, water or minerals
• what is labour?

  human input - physical or mental effort - used ot produce goods or services
• what is capital?

  refers to man-made goods used to produce other goods and services - like machinery, tools, or buildings
• what is enterprise (entrepreneurship)?

  organisation and risk-taking involved in bringing together land, labour and capital to produce goods or services
• what do the environmental resources include?

  • physical resources: e.g soil, water, forests, and minerals
  • gases e.g hydrogen and oxygen
  • abstract resources e.g solar energies, wind energies, landscapes, good air, clean water
• what can environmental resources be split into?

  Renewable and nonrenewable
• what can non-renewable resources be further divided into?

  recyclable and non-recyclable
• what is a renewable resource?

  a resource that can replenish itself naturally over time if sustainably managed
• what is a non-renewable resource?

  a resource that is finite and will eventually run out
• what is the reward for each factor of production?

  • land - rent
  • labour - wages
  • capital - interest
  • enterprise - profit
• what is the difference between working capital and fixed capital?

  • fixed capital: long term tools (e.g machines, equipment)
  • working capital: resources used up quickly (e.g material, stock)
• what is human capital?

  the value of a worker’s skills, experience and eduction - higher human capital increases productivity
• what is the role of the entrepreneur in the economy?

  to take risks, organise resource, and drive innovation and growth by creating new products/services