Question 1

Which combination of a factor of production and its factor income is not correct?

factor of production factor income

A capital interest
B enterprise profit
C labour dividends
D land rent

Question 2 Question 3
On which factor of production does innovation directly depend? What is the key role of an entrepreneur?
A. decisions of entrepreneurs A. inventor
B. high inputs of capital B. risk taker
C. long hours of manual labour C. shareholder
D. plentiful supplies of land D. worker

Question 4 Question 5
What is classified as one of the four economic resources? Which factor of production involves risk-taking?
A. consumption A. capital
B. enterprise B. enterprise
C. production C. labour
D. trade D. land

Question 1
What is not a factor of production?
A. a $20 banknote
B. an o ce
C. a photocopier
D. a secretary
Question 2
A government wishes to increase agricultural output. It gives farmers the tools to irrigate the farmers’ fields.
Which factors of production are provided by the farmers?
A. capital and enterprise
B. enterprise and labour
C. labour and land
D. land and capital

Question 3
In farming, what is an example of what economists call capital?
Question 6
A. savings the farmer haswould
What in the bank
be classified by an economist as the factor of production known as land?
B. shares in a farming A.
company
a discovery of oil in the South China sea
C. the money the farmer setoilaside
B. an to payby
rig bought taxes
an oil company
D. the tractor owned by the farmer
C. money held by the oil companies in their bank accounts
D. the productivity of oil workers
Question 4
What would an economist regard as an example of the factor of production capital?
A. an individual’s purchase of stocks and shares
B. borrowing by a firm to pay for electricity
C. the building by a firm of a new factory
D. total savings by individuals in a country

Question 5
Which factor of production is not represented in the list shown?

bananas a factory goats a risk taking investor

A. capital
B. enterprise
C. labour
D. land

Question 6
What would be classified by an economist as the factor of production known as land?
A. a discovery of oil in the South China sea
B. an oil rig bought by an oil company
C. money held by the oil companies in their bank accounts
D. the productivity of oil workers
Question 1
Reena makes a living by selling paintings of the town in which she lives. She sells them in an open-air market once a week.
In order to be able to sell more pictures in a week she decides to buy a studio, pay someone to help in the studio and try to
increase demand by advertising in the local paper.
Which factors of production were changed?
A. capital only
B. labour and capital
C. labour and land
D. labour only

Question 2
Which statement about factors of production is correct?
A. Capital is the amount of money borrowed from a bank.
B. Labour is output made by an employee.
C. Land includes commercially grown rice crops.
D. Profit is the reward for enterprise.

Question 3
What is most likely to increase the occupational mobility of labour?
A. building more houses
B. increased spending on re-training schemes
C. increased total government spending
D. increasing the information on job availability

Question 4
Which example of a factor of production in the fishing industry is correct?

factor
A capital
B enterprise
C labour
D land
example
charges on loan for fishing boat
salaries of fish warehouse managers
profits of fish shop owners
fish in the sea
Question 5
John owns a bakery and produces various types of bread. To meet the increasing demand, he decides to invest in modern
baking machines. He also hires skilled bakers to improve the production process and quality of bread.

Which factors of production were changed?

A. Land and Labor
B. Labor and Capital
C. Capital and Entrepreneurship
D. Entrepreneurship and Land
 Question 1
In May 2017, the price of olive oil rose by more than 10%. This was caused by a drought in Greece, Italy, Spain and Tunisia, the
major producing countries. Global supply was forecast to fall by 14% in 2017. Demand for olive oil fell in Europe, but rose in a
number of other countries including Australia, Brazil and China. Some basic food items, including bread and rice, are taxed in
some countries but are subsidised in other countries.
Identify two examples of land used in growing agricultural crops
[2 marks]
SEEDS AND WATER

Question 2
In March 2017, Peru was hit by floods and the strongest winds in decades. Roads, bridges, houses and capital goods were
destroyed. It is expected that the damage caused will affect Peru’s Human Development Index (HDI) and economic growth
rate. In 2016, Peru experienced a 4% economic growth rate which was higher than the growth rate of the USA
Define a capital good
[2 marks]
A human-made good (1) used to produce other goods and services (1) e.g. robotic arm
used in car manufacturing
Question 3
State a factor of production and identify an example of it from the extract.
Refer to the source materials in your answer.
[2 marks]
Capital (1) stock exchange (1)

Enterprise (1) new business start ups (1)

Question 4
It has recently been revealed that a king works as a part-time pilot for a multinational airline. Some pilots and police o cers
have left their jobs to become teachers and others have left to become sole traders. The wages teachers earn vary
according to their age.
Define wages.
[2 marks]
Wages are a payment to an employee (1) as a reward for providing their labour to the
employer (1) e.g. young teachers earn $15 / hour

Question 5
Some economists have claimed that the 21st century will be the ‘African century’ because of the growth in their working-age
population. Forecasts show that by 2030, Africa’s contribution to the increase in the global labour force will exceed that
from the rest of the world. This will a ect incomes, saving, and economic policies in African countries.
Define labour.
[2 marks]
Labour is the human factor of production (1) that includes all of the physical and mental
efforts from workers needed for production (1) e.g. workers in a coffee shop
Question 6
The price of gold rose in 2016. This encouraged owners of gold mines to employ more resources to increase the supply of
gold. The level of competition in gold production varies in the different gold producing countries. A number of countries,
including India, impose a tariff on imported gold.
Identify two factors of production involved in mining gold.
[2 marks]
Labour/miner (1)

Land/gold ore (1)

Question 7
High technology (hi-tech) firms use a range of resources including labour and land. One US hi-tech firm has produced a new
price index which it claims is more accurate than the Consumer Prices Index (CPI). Central banks try to achieve the most
accurate measure of inflation because inflation has e ects on a range of people, including savers and borrowers, and on the
level of investment in a country.
Identify the reward received by labour and the reward received by enterprise.

Labour = wages (1) [2 marks]

Enterprise = profit (1)

Question 8
Farms in the USA are getting larger. One dairy farm in the state of Indiana has over 38 000 cows. Farms in the USA compete
with farms in both developed and developing countries. The value of the farms’ exports of milk appears in the trade in goods
section of the current account of the USA’s balance of payments.
Identify two examples of capital goods that may be used by a farm.
[2 marks]
Combine harvester (1)

Milking machine (1)

Question 1
In 2017, the Brazilian paper industry was booming. Its total revenue increased and it employed both more, and better quality,
factors of production. Brazil’s largest paper producer merged with an Indonesian paper-producing firm at the end of 2017.
The performance of Brazil’s co ee industry di ered from its paper industry. Brazilian co ee experienced a fall in demand and
a fall in total revenue.
Explain two di erences between capital and labour.
[4 marks]
The quality of capital can be improved over time as technology gets better (1) whereas the
quality of labour can improved over time through education (1). Capital is usually machinery
which can work non stop for 24 hours (1), whereas the labour of workers requires regular rests
and overnight breaks (1)
 Question 2
Changes in the supply of enterprise result in the development of new firms. In 2016, a theme park in Hong Kong made a loss
with visitor numbers falling by 9%. In 2017, the same public limited company opened another larger theme park in Shanghai.
The new theme park is expected to benefit from both internal and external economies of scale.
Analyse how a government could increase the supply of enterprise.
[6 marks]

Enterprise is the factor of production that organises the other factors of production in order
to produce goods/services (1). Firstly, the Chinese government could spend more on education
and training (1) which would improve people's skills (1) and this should help generate more
entrepreneurs in China who have the ability to start up or run a business (1)

Secondly, the Chinese Government could relax its immigration laws (1) so that more
entrepreneurs move to China (1) in order to set up and run a business (1)

Question 3
It has recently been revealed that a king works as a part-time pilot for a multinational airline. Some pilots and police o cers
have left their jobs to become teachers and others have left to become sole traders. The wages teachers earn vary
according to their age.
Explain the di erence between geographical immobility of labour and occupational immobility of labour
[4 marks]
Geographical immobility of labour occurs when workers find it difficult to move from
one geographical area to another (1) in order to secure employment (1). Whereas,
occupational immobility of labour refers to the ability of a worker to change occupations when
they lose a job (1). If their skill base is transferable between different occupations, then their
occupational mobility is high (1)

Question 4
The price of gold rose in 2016. This encouraged owners of gold mines to employ more resources to increase the supply of
gold. The level of competition in gold production varies in the di erent gold producing countries. A number of countries,
including India, impose a tari on imported gold.
Explain two influences on the quality or quantity of factors of production available to an economy
[4 marks]
One influence on the quantity or quality of factors of production is technological advances (1).
These can often improve the quality of the factors of production
e.g. development of metal alloys (1). Secondly, another influence is changes in the cos
e.
of factors of production (1) for example, higher energy costs caused by the war in the Ukraine (1).
Higher costs reduce the output of a nation as the input prices are now more expensive (1)
Question 1
Discuss whether or not the supply of enterprise is likely to increase in the Philippines.

Refer to the source material in your answers.

[8 marks]
On one hand, there are reasons why the supply of enterprise may increase. First, the population
is increasing, going from 72.9 million to 105.8 million in just seven years (1). This means there are
more potential business owners (1). A growing population means more people want products, which
can encourage more people to start their own firms. Second, there are many well-educated young
people (1) who can work for companies (1). This can also attract big companies from other countries
(MNCs). (1)

However, there are also reasons why the supply of enterprise may not increase. First, the country has
relatively high taxes (1), and high taxes can make people not want to start businesses (1). Second,
there's a lot of traffic congestion and poor transport infrastructure (1). This raises production costs (1),
which means less profit for the firms (1). This reduces the incentive for entrepreneurs to launch new
businesses (1)

Question 2
Discuss whether or not a country’s economic growth rate depends mostly on the availability of its natural resources.
Refer to the source material in your answers.
[6 marks]

On one hand, there are reasons why a country’s economic growth rate depends mostly on the
availability of its natural resources. First, natural resources are an important factor of production
e.g. oil (1). Countries endowed with natural resources have a good productive capacity (1).
This boosts their growth and enhances their international competitiveness (1). Second, a
lack of natural resources such as water can cause poverty and ill health (1). This can harm
the productivity of the workforce (1)

However, there are also reasons why the availability of natural resources is not the most
important factor for growth. First, other factors of production are equally or more important.
Examples include capital investment or education for skills (1). Without these, production would
slow down or not take place (1). Second, it may depend upon what the country specialises in (1).
If they can import raw materials for production without trade restrictions, growth will be easier (1)