1.2.

1 Production
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Learning outcomes

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Starter – Google Jamboard
1. Outline the different resources required to produce the goods and services offered by
the different firms.

2. Separate all the resources into the 4 factors of production categories.

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Factors of production
Factors of production refer to the resources that are required to produce goods and
services. The four factors of production can be remembered using the acronym CELL.

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Factors of production
Capital refers to man-made resources e.g., vehicles, machinery, and infrastructure.

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Factors of production
Enterprise refers to the skill of organizing the three other factors of production. Famous
entrepreneurs include Elon Musk, Jeff Bezos, Oprah Winfrey, and Vera Wang.

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Factors of production
Land refers to natural resources e.g., agricultural land, wood, gold, water, and oil.

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Factors of production
Labour refers to human resources e.g., factory workers, teachers, artists, and
engineers.

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Sectors of the economy
Each economy is divided into 3 main sectors of economic activity.

• Primary

• Secondary

• Tertiary

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Primary sector
The primary sector involves economic activity which extracts raw materials from the
earth and produces the factor of production “land”. This includes agriculture, fishing,
forestry, and mining.
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Secondary sector
The secondary sector involves economic activity where raw materials i.e., “land” is
converted to manufactured goods. Examples include car production, textile production,
energy utilities, food, and construction.
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Tertiary sector
The tertiary sector involves the provision of services such as education, healthcare,
financial, legal, entertainment, and transportation.

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Changes in the importance of different sectors
Watch: What Happened Before History? Human Origins

1. How did humanity develop from hunter gatherers to farmers.

2. How did humanity and civilization develop from agriculturally based

communities to develop manufacturing and industries.

3. Outline how industrialized economies began to deindustrialize and focus on

tertiary services.

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Developed and developing economies
A key difference between developed and developing economies is the contribution of
the primary, secondary, and tertiary sectors towards economic activity.

Visit: Gapminder tools

1. Select the Y axis variable. Economy > Sectors > Agriculture/Industry/Services

2. What differences do you notice about the % of GDP that agriculture contributes for
developed economies vs developing economies?

3. What differences do you notice about the % of GDP that industry contributes for
developed economies vs developing economies?

4. What differences do you notice about the % of GDP that services contributes for
developed economies vs developing economies?

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