Factors of Production – IGCSE Economics Lecture

Vocabulary flashcards summarising key terms and definitions from the lecture on factors of production, their rewards, mobility, and influences on quantity and quality.

Factors of Production

The resources required to produce goods or services: land, labour, capital and enterprise.

Land (Factor of Production)

All natural resources used in production, e.g., oil, coal, water, wood, metal ores, agricultural products.

Labour

Human resources involved in production, including both skilled and unskilled workers.

Capital

Manufactured resources used in production such as machinery, tools, equipment and vehicles.

Enterprise

The entrepreneurial skill to combine and manage land, labour and capital while taking risks.

Rent

The reward paid for the use of land as a factor of production.

Wages and Salaries

The reward paid to labour; wages are hourly payments, salaries are fixed monthly payments.

Interest

The reward paid for the use of capital; the cost of borrowing money for production.

Profit

The reward to enterprise for risk-taking and innovation; what remains after all costs are paid.

Income (in Economics)

Collective term for the four rewards—rent, wages, interest and profit—earned by the factors of production.

Mobility of Factors of Production

The ease with which resources can be reallocated or substituted in the production process.

Labour Mobility

The ability of workers to move between jobs or locations for employment.

Geographical Mobility

Workers’ willingness and ability to relocate to a different area for work.

Occupational Mobility

Workers’ capacity to change jobs or professions, often through retraining or upskilling.

Family Ties and Commitments

Social factors (e.g., proximity to family, children’s schooling) that can limit geographical mobility.

Cost of Living

Regional expense differences that may deter workers from relocating, reducing geographical mobility.

Training Costs

Time and money required to gain new skills, influencing the level of occupational mobility.

Change in Factor Costs

Adjustments in the prices of land, labour, capital or enterprise that alter their demand by firms.

Tax

A government levy on income or expenditure that raises production costs for firms.

Subsidy

Government financial assistance that lowers production costs for domestic producers.

New Technology

Innovations that raise productivity and lower average production costs.

Net Migration

The difference between immigration and emigration; affects the quantity of labour available.

Education and Healthcare Improvements

Policies that enhance labour quality by increasing workers’ skills and productivity.

Unfavourable Weather Conditions

Events like droughts or floods that reduce the supply of agricultural products (land factor).

Ceteris Paribus

Latin for “all other things remaining equal,” used to isolate the effect of one economic variable.