Factors of Production and Opportunity Cost

A set of 10 question-and-answer flashcards reviewing the four factors of production and the concept of opportunity cost based on the lecture notes.

What four factors of production do businesses combine to create goods and services?

Land, Labour, Capital, and Enterprise.

How is Land defined as a factor of production, and what natural resources are listed as examples?

Land is defined as all natural resources provided by nature, with examples including land for buildings, water, forests, minerals, oil, and gas.

What is the definition of Labour as a factor of production?

Labour is the physical and mental effort people put into production.

What is Capital, and what are five examples of it given in the notes?

Capital consists of man-made resources used to produce other goods and services, such as machines, tools, buildings, vehicles, and computers.

What is Enterprise defined as in the factors of production?

Enterprise is the ability to take risks, make decisions, and organise the other factors of production.

In the Pizza Hut example, what represents Capital and what represents Enterprise?

Capital is represented by ovens, tables, mixers, and delivery bikes, while Enterprise is represented by the owner who plans, takes risks, and manages all factors.

In the context of European Standard School (ESS), how are Labour and Capital exemplified?

Labour is represented by teachers teaching and cleaners keeping the school clean, while Capital is represented by tables, chairs, boards, and projectors.

What is Opportunity Cost?

Opportunity Cost is the next best alternative that we have to give up when we make a choice.

If a business owner chooses to open a coffee shop instead of a clothing shop, what is the exact opportunity cost stated in the notes?

The Clothing Shop (Tk. 50,000).

According to the notes, what three negative outcomes occur when a business wastes resources?

Wasting resources leads to less profit, higher costs, and lost opportunities for better use.