factors of production

Cards (15)

  • Factors of production

    The inputs into a production process in order to achieve an output
  • The four factors of production

    • Land
    • Labour
    • Capital
    • Enterprise
  • Land
    • Natural resources such as agriculture, fishing, forestry, oils
  • Labour
    • The skills available and characteristics of the workforce
  • Capital
    • Investment in man-made aids to production such as factories and machinery
  • Enterprise
    • The risk undertaken by an entrepreneur in transforming the other factors of production into output in order to gain a reward, normally profit
  • Economic resources

    The factors of production that earn reward for their use in the form of rent, wages, interest and profit
  • Production process

    Firms take the factors of production and turn them into products that they sell for profit
  • Factor inputs
    The factors of production that producers input into the production process
  • Factor output

    The new products created by adding value to the factor inputs
  • Land
    • Below the earth e.g. oil
    • On the earth e.g. crops
    • Above the earth e.g. birds
    • In the sea e.g. fish
  • Human capital

    The value of a worker based on their skills, qualifications and experience
  • Capital (as a factor of production)
    The money paid for the man-made aids used in the production process e.g. equipment, premises
  • Entrepreneur
    Takes land, labour and capital and organises them to produce profitable products, creating wealth and employment
  • Rewards to the factors of production

    • Rent (for land)
    • Wages (for labour)
    • Interest (for capital)
    • Profit (for enterprise)