Factors of production chapter 2 economics

Capital

Man made resources used for production of goods and service (eg. Machinery and factories0

Enterprise

Organisational skills of individuals

Land

Natural resources used for production in goods and services

Labour

All human efforts used in producing goods and services (mental efforts—>doctors ,physical efforts—>janitor)

Rewards for capital

Interest

Rewards for enterprise

Profits made

Rewards for labour

Wages made

Rewards for land

Rent

Factor mobility

how easy a factor of production can be moved from one use to another , without incurring significant cost

Pros of factor mobility

-allows more flexibility in production

-increases total output of goods and services

-enables firms to improve on their production methods

How can factors move

-within a firm/an industry

-between regions/countries and different industries

Occupational mobility

Ability to move FOP between different productive task

Geographical mobility

Ability to move FOP to different locations

Land mobility (least mobile)

1. Occupationally —> the extent to which land resources can easily switch between alternative uses

   -mobile—>can be used for multiple thing , immobile—>can only be used for a specific thing

2. Geographically mobile—>extent to which land resources can be physically moved . Mobile means physically moved, immobile means cannot be moved

Labour mobility

1. Occupationally mobile—>refers to the ease with which workers can switch from one job to another in different fields

   -mobile—>able to change work field, depends on level and cost of education and training

2. Geographically mobile—>refers to the workers ability to relocate from one place to another for employment

   -mobile—>able to move from one location to another for employment , depends on family ties and cost of relocation

Capital mobility (more geographically mobile )

1. Occupationally mobile—> refers to the purpose of the goods

   -mobile—>capital goods can be used for many different functions, depends on the purpose of the goof

2. Geographically—> refers to where capital goods are used

   -mobile —> capital goods can be moved from one place to another and depends on transportation cost

What is a pro of changes in quantity and quality of the factors of production

More goods and services produced

How to improve quantity of land

Growing more trees increases the supply of wood, increasing rent prices persuades landowners to give up the land space for more productive uses

How to improve quality of land

Fertilisers may improve soil conditions allowing more crops to grow

How to improve quality of labour

Improve working conditions can improve labour productivity

How is capital quantity determined

Technological advancement (eg. More advanced machines=more products produced)

How is capital quality determined

Advancement of technology (better technology = better quality of product)

How to increase Quantity of entrepreneurs

-provide grants or loans to let them start their own business

How to increase quality of enterprise

Depends on education and training (more training services can improve business success)

How to improve quantity of labour

Increase wages earn to motivate workers to stay and to attract people to work