ch2

• Factors of production


  The resources required to produce a good or service, namely land, labour, capital and enterprise
• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Land


  • The natural resources required in the production process, such as oil, coal, water, wood, metal ores and agricultural products
• Labour


  • The human resources required in the production process, including skilled and unskilled labour
• Capital


  • The manufactured resources required in the production process, such as machinery, tools, equipment and vehicles
• Enterprise


  • The skills a business person requires to combine and manage the other three factors of production successfully
• The first letter of each of the four factors of production spells the word CELL. This is a useful way of remembering the four factors of production.
• Rent


  The reward for land
• Wages and salaries

  The reward for labour
• Interest


  The reward for capital
• Profit


  The reward for enterprise
• Income


  The collective rewards for the factors of production
• Geographical mobility


  The willingness and ability of a person to relocate from one area to another for employment purposes
• Occupational mobility

  The ease with which a person is able to change between jobs
• Generally, the more occupationally and geographically mobile workers are in a country, the greater its international competitiveness and economic growth are likely to be
• Higher labour costs caused by an increase in the national minimum wage

  Tend to reduce the demand for labour
• Government policies (taxes, subsidies, regulations)


  Affect the costs of production
• New technologies


  Allow firms to produce more output and cut average costs of production
• Net migration of labour


  Affects the quantity of labour in the economy
• Improvements in education and healthcare

  Improve the quality of labour
• Unfavourable weather conditions


  Reduce the supply of agricultural products
• Favourable weather conditions

  Increase the supply of agricultural products