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AS CH - 3 Notes

The document outlines the four factors of production: Land (natural resources), Labour (human workforce), Capital (man-made resources), and Enterprise (entrepreneurial management). It discusses the benefits of specialization and division of labor in increasing efficiency and production, while also highlighting potential risks such as redundancy and job losses. Overall, it emphasizes the importance of these factors in the economy and their impact on production and living standards.

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Maira War
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43 views2 pages

AS CH - 3 Notes

The document outlines the four factors of production: Land (natural resources), Labour (human workforce), Capital (man-made resources), and Enterprise (entrepreneurial management). It discusses the benefits of specialization and division of labor in increasing efficiency and production, while also highlighting potential risks such as redundancy and job losses. Overall, it emphasizes the importance of these factors in the economy and their impact on production and living standards.

Uploaded by

Maira War
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

AS -CH -3 -Factors of Production

Economic Resources

• Definition -> The inputs used to produce goods and services; they are divided into 4 factors of production
(FOPS)

Land

• Definition -> The natural resources of an economy; all that lays on the surface of the earth

• Examples -> Farmland, mineral deposits, forests, lakes and rivers

Labour

• Definition -> The human workforce of the economy, includes the physical and mental effort involved
production

• Alias -> Intellectual capital or Human capital

• Considers -> Skills, knowledge and abilities, AND the potential workforce (the ones willing and able to
work, yet currently unemployed)

• Size/Magnitude -> Depends on population size, working age, and education/training of the workforce

Capital

• Definition -> The human-made inventions that aid in production

• Examples -> Tools, machinery, equipment, buildings (eg. factories

• Fixed Capital -> Machinery

• Working Capital -> Eg. Stocks of raw materials

Enterprise

• Definition -> The role of the Entrepreneur in managing all 3 other FOPS, in order to enable production

• Entrepreneur -> His risk-taking endeavours make him differentiate from other workers

• Responsibility -> Organise all 3 other FOPS to promote efficiency and increase output

Factor of Production Definition

Land Natural resources

Labour Human Workforce; Physical and Mental human effort

Capital Man-made resources; eg. Machinery

Enterprise Production management, risk-taking endeavours

Specialisation

• Specialisation occurs when individuals, firms, regions, or economies focus on producing certain goods and
services instead of others.

• It allows individuals to concentrate on what they do best, increasing overall production.


• Specialisation has improved global living standards but comes with risks:

o Technological advancements may make specialised skills redundant.

o Changing consumer demand can lead to job losses in certain regions or industries.

Division of Labour

• The division of labour is when production is broken down into multiple tasks, with workers specialising in
specific parts.

• Enabled by technological advancements and large-scale production.

• Benefits:

o Increases efficiency and output per worker.

o Reduces production costs.

o Improves the quality of finished goods.

Role of entrepreneur (from textbook)

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