Factors Of Production
Overview
Every good and every service you have ever used, from a bowl of rice to a streamed film, was made by combining the same four basic resources. Economists call them the factors of production, and learning to spot them is the first real tool of economic thinking: it lets you take any business in the world apart and see exactly what it needs to run.
In this lesson you will define and give examples of land, labour, capital and enterprise, learn the reward each one earns, and understand why their quantity and quality keep changing over time. Master this and the rest of the course, from costs to growth to trade, slots neatly into place.
Objectives
- definitions of factors of production: land, labour, capital and enterprise
- rewards to factors of production: rent, wages, interest and profit
- causes of changes in the quantity and quality of factors of production
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Factors Of Production. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which of the following is an example of capital as a factor of production? A. a coal deposit B. a factory machine C. a shop worker D. money in a bank Answer: B
- What is the reward earned by the factor of production called enterprise? A. rent B. wages C. interest D. profit Answer: D
- A worker is willing to move to another city to take a new job. This is an example of: A. occupational mobility B. geographical mobility C. capital mobility D. factor immobility Answer: B
- Which change is most likely to increase the quality of labour in an economy? A. a fall in net migration B. improved education and training C. a higher minimum wage D. a severe drought Answer: B
- Which factor of production earns rent? A. land B. labour C. capital D. enterprise Answer: A
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