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FACTORS OF PRODUCTION

Factors of Production
The scarce of limited resources which are used to produce the commodities people want to consume are collectively called the factors of production

Types of Production

Factors of Production (Land)


Land consists of all the natural resources on the earth including those of the sea. Land is therefore the free gift of nature and is considered the most important factor of production since production cannot take place without it

Factors of Production (Land)


Land comprises the geographic surface of the earth, rivers, lakes, seas and minerals.

E amples of Land

Factors of Production (Land)


Renewable Resource
Non-Renewable Resource
%il &sphalt (pitch) Limestone 'au ite

Fertile land! use of fertili"er Fish (Land)! fish farming Forest (Land)! reforestation #ater ($y nature e.g. rainfall)

Factors of Production ((apital)


Capital refers to the money and all other assets that are employed in the process of production

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Factors of Production ((apital)


Other examples include:
$uilding, machinery, e*uipment stocks used in production of goods and services

Factors of Production ((apital)

Factors of Production ((apital)


Fi ed capital is the items that remain in the $usiness for a long time and used to produce further wealth such as $uildings, machinery and other e*uipment

Factors of Production (Enterprise)


This refers to the special skills (called entrepreneurship) that some people have to organise the other factors of production. These people are called entrepreneurs. They decide what to produce, how, for whom and where to produce the goods and services. Entrepreneurs take risks, raise finance, employ, co+ ordinate factors of production (efficiently used).

Factors of Production (La$our)


La$our is the factor of production which is people,s physical and mental contri$ution to the creation of goods and services. -t is the factor that converts resources into goods and services that people want. The contri$ution of production is usually rewarded with wages or salaries, profits or interests.

Factors of Production (La$our)


Semi-skilled and unskilled

.o$s which involve little or no special training and usually involves working with the hands. For e ample!
)rivers (leaners watchmen

Factors of Production (La$our)


Skilled

Engineers /echanics Electricians Plummer (omputer operators

Factors of Production (La$our)


Managerial and professional

'usiness e ecutives Teachers )octors 0urses &rchitects

Factors &ffecting the La$our 1upply


Rate of growth of the population -f the population is growing and migration is constant then the la$our supply in the country will increase. he structure of the population &n aging or very young population would mean a smaller la$our supply. -f the policy of the country is to retire its citi"ens at an earlier age then this would restrict the la$our supply.

Factors &ffecting the La$our 1upply


Cultural patterns and religious reasons -f women are not allowed to work, the availa$ility of la$our would $e adversely affected. !uality of the labour force -f the population has the appropriate skills and is healthy this would $e reflected in the la$our supply.

Factors &ffecting the La$our 1upply


"ducational #olicy and $ealth of the nation

-f the training period of individuals is long then a smaller population would $e availa$le to form the la$our force. 1imilarly with $etter health facilities, individuals would spend fewer days away from the 2o$ $ecause of illness.

"conomic Conditions
%n some countries& the 'family wage( may be sufficient and& thus& wi)es may not be re*uired to work+

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Factors &ffecting the La$our 1upply


Migration #atterns
The ease with which individuals are allowed to leave a country would affect the la$our force. /igration has $een $oth internal and e ternal

Factors &ffecting the La$our 1upply


%nternal migration is the movement of people within a country, for e ample, rural to ur$an and vice versa. People are attracted to developed countries to e perience a perceived $etter standard of living. This type of movement out of one,s country is called external migration.

1elf+help 3roups
he economic contributions . 4. -t reduces unemployment since community mem$ers may $e employed. 5. -t raises the standard of living of the people $y providing the essential amenities to the community. 6. %ther services or sin+off pro2ects may develop.

Factors of Production (La$our)


Methods used to impro)e the producti)ity of labour

4. -mproving education and skill+training. 5. /aking sure employees speciali"ed in a particular skill. 6. -ncreasing wages and other financial incentives. 7. -mproving the health of workers $y providing health+care $enefits and information on health issues. 8. -mproving the working conditions, such as $etter lighting, tools, and ventilation.

Effects of /igration on La$our


"ffects of %nternal migration 4. )ecrease in la$our supply of that community from which migration move. 5. The loss of the more *ualified persons who move out of the community thus hindering intellectual, economic and social development. 6. )istri$ution of social relationships and patterns of cultural growth within the community.

Effects of /igration on la$our and the (ountry


O)ercrowding of towns resulting in poor housing& slums and health problems+

Effects of /igration on La$our and the (ountry


3aps in provision of amenities in towns, such as schooling, health facilities and recreational facilities.

Effects of /igration on La$our and the (ountry

Effects of /igration on La$our and the (ountry


"ffects of external Migration ,-rain drain.

Effects of /igration on La$our and the (ountry


/ore money would have to $e spent training other people for these 2o$s. /igration disrupts cultural life since adults migrate leaving children to $e cared for $y grandparents or si$lings