FACTORS OF PRODUCTION « Factors of Production are ‘Economic Resources used to produce goods & services’ + Most economists identify four factors of production -Production of all goods & services requires the four factors of production in varying proportion. FACTORS OF PRODUCTION a LAND LABOUR CAPITAL ENTERPRISE ™SUPPLY OF FACTORS OF PRODUCTION + Can the supply of all four factors of production increased? *Can the quantity of factors of production be changed? *Can the quality of factors of production be changed? = MOBILITY OF FACTORS OF PRODUCTION + How easy or difficult it is for factors of production to be transferred to alternative industries or different locations. Occupational mobility: capable of changing use je of moving from one location to another location MOBILITY OCCUPATIONAL GEOGRAPHICAL| MOBILITY MOBILITYLAND Meaning Land covers all natural resources used for production process. *So besides land itself , it also includes what lies beneath the land, on the land and other natural resources Q: Factory build ona piece of land- Is this an example of ‘LAND’ as factor of production? Supply of ‘LAND’ *Can the quantity / supply of physical land change with time? How? *Why do we need to change quantity of land? Quality of ‘LAND’ *Can the quality of land change with time? How? “Why do we need to change quality of land? Mobility of ‘LAND’ “Is land occupationally mobile or immobile? sls land geographically mobile or immobile? LABOUR Meaning *Labour covers all human effort- mental /physical/skilled/unskilled *Also referred as Human Resources/ Human Capital Supply of ‘LABOUR’ *Can the quantity / supply of labour change with time? How? *Why do we need to change the quantity of labour? *Supply of labour depends on- The size of the population “The age structure of the population V The ratiremant age The school leaving age W Attitude to working women “Number of hours for which people work for depends on- Y Length of the average working day “Full time or part time job Y Over-time facility “Length of holidays Amount of time lost through sickness or illness"Labour force/workforce/ working population —all individuals of working ‘age who are employed or are unemployed and seeking work. "Labour productivity- output per worker Quality of ‘LABOUR’ *Can the quality of labour change with time? How? *Why do we need to change quality of labour? Mobility of ‘LABOUR’ “ls labour occupationally mobile or immobile? “ls labour geographically mobile or immobile? "Geographical mobility of labour depends on- Cost of living in differenta v Family ties vCultural/ educational differences Lack of information about better work opportunities Restriction on the movement of workers CAPITAL Meaning *Also referred as - Human -made goods / manufactured goods/ producer goods /capital goods “Used to produce other goods and services Q; Is computer a capital good ora consumer good? Supply of ‘CAPITAL’ *Can the quantity / supply of capital change with time? *Can it be increased/ decreased ? Gross Investment : expenditure on capital goods Depreciation : value of replacement of capital goods when become obsolete Net Investment : Gross Investment- Depri Quality of ‘CAPITAL’ *Can the quality of capital change with time? How? *Why do we need to change quality of capital? Mobility of ‘CAPITAL’ ‘Is capital occupationally mobile or immobile?? Give examples sls capital geographically mobile or immobile? Give examplesENTERPRISE Meaning gs all other factors of production together for production of goods & sel s..known as Entrepreneurs “Willingness and ability to bear uncertain risks and make decisions (Q: Who bears risk and who makes decision in a large publicItd company? Supply of ‘ENTREPRENEURS’ *Can the quantity / supply of entrepreneurs change with time? Quality of ‘CAPITAL’ *Can the quality of entrepreneurs change with time? How? “Why do we need to change quality of entrepreneurs? Mobility of ‘ENTREPRENEURS’ *Are entrepreneurs occupationally mobile or immobile? *Are entrepreneurs geographically mobile or immobile? PAYMENT TO FACTORS OF PRODUCTION LAND- Rent LABOUR — Wages /Salaries CAPITAL - Interest ENTERPRISE - Profit