1.2

Factors of production

9 flashcards to master Factors of production

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Definition Flip

Define 'factors of production' and list the four categories.

Answer Flip

Factors of production are the resources used to produce goods and services. The four categories are land, labour, capital, and enterprise.

Definition Flip

What is 'land' as a factor of production, and provide an example?

Answer Flip

'Land' refers to all natural resources used in production, including fertile soil, minerals, forests, and water. An example is the land used for farming or the minerals extracted from a mine.

Key Concept Flip

Explain 'labour' as a factor of production, including the concept of 'human capital'.

Answer Flip

'Labour' is the human effort, both physical and mental, used in producing goods and services. 'Human capital' refers to the skills and knowledge of the workforce, which can be improved through education and training.

Definition Flip

Describe 'capital' as a factor of production, and give a specific example.

Answer Flip

'Capital' refers to man-made goods used to produce other goods and services; it is also called physical capital. Examples include machinery, tools, factories, and equipment used in production.

Definition Flip

What is 'enterprise' (or entrepreneurship) as a factor of production?

Answer Flip

'Enterprise' is the ability to combine the other factors of production to create goods and services, taking risks and innovating. An entrepreneur organizes land, labour, and capital to produce a product or service.

Key Concept Flip

How does an increase in 'human capital' affect a country's production possibilities?

Answer Flip

An increase in human capital, such as through better education and training, leads to a more skilled and productive workforce. This allows a country to produce more goods and services, shifting its production possibilities curve outwards.

Key Concept Flip

Give an example of how 'land' as a factor of production can be improved.

Answer Flip

Land can be improved through irrigation projects which increases its fertility, soil enrichment, or reclamation of barren land to make it usable for agriculture or other production activities.

Key Concept Flip

Explain the difference between 'physical capital' and 'financial capital'.

Answer Flip

'Physical capital' refers to man-made goods used in production, like machinery. 'Financial capital' refers to funds used to purchase physical capital or for business operations. One is a tool, the other a source of funding.

Key Concept Flip

Explain how entrepreneurship contributes to economic growth.

Answer Flip

Entrepreneurs identify opportunities, take risks to establish new businesses, and innovate by introducing new products or processes. These activities create jobs, increase output, and foster economic growth.

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1.1 The nature of the economic problem 1.3 Opportunity cost

Key Questions: Factors of production

Define 'factors of production' and list the four categories.

Factors of production are the resources used to produce goods and services. The four categories are land, labour, capital, and enterprise.

What is 'land' as a factor of production, and provide an example?

'Land' refers to all natural resources used in production, including fertile soil, minerals, forests, and water. An example is the land used for farming or the minerals extracted from a mine.

Describe 'capital' as a factor of production, and give a specific example.

'Capital' refers to man-made goods used to produce other goods and services; it is also called physical capital. Examples include machinery, tools, factories, and equipment used in production.

What is 'enterprise' (or entrepreneurship) as a factor of production?

'Enterprise' is the ability to combine the other factors of production to create goods and services, taking risks and innovating. An entrepreneur organizes land, labour, and capital to produce a product or service.

About Factors of production (1.2)

These 9 flashcards cover everything you need to know about Factors of production for your Cambridge IGCSE Economics (0455) exam. Each card is designed based on the official syllabus requirements.

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