The Factors of Production

To produce goods and services the factors of production need to be allocated accordingly.
If the business gets this aspect wrong it is likely to be uncompetitive and eventually go out of
business. Setting up a business is always a risk but the reward for getting it right is the profit
the business makes. 

1) The four factors of production are: (4 marks) 

a) 
b)
c)
d)
 
2) Identify whether the following industries are likely to be land, labour or capital intensive. 
(8 marks) 

a) A cattle farm _____________________________ 

b) A modern car factory _____________________________ 
c) A hairdressing salon _____________________________ 
d) A bank headquarters _____________________________ 
e) Intensive market gardening (greenhouses) _____________________________ 
f) Google main offices _____________________________ 
g) Harvest time in a coffee plantation _____________________________ 
h) Harvest time on a wheat farm in the US _____________________________ 

3) Explain why a car manufacturer may decide to replace workers with capital on its production
lines. (4 marks) 

3) In economics a computer bought by a firm for its account keeping is classified differently to a
computer bought by an individual for playing games and surfing the internet. Explain why. 
(3 marks) 

4) Discuss how firms and governments can try and make the labour force more productive 
(6 marks). 
Costs of the Factors of Production 
The cost of labour are the wages/salary, the cost of land is the rent and the cost of capital is
interest.