The Factors of Production
- Factors of production are the resources used to produce goods & services
- Land, labour, capital & enterprise
- Land, labour, capital & enterprise
- The production of any good/service requires the use of a combination of all four factors of production
- Goods are physical objects that can be touched (tangible) e.g. mobile phone
- Services are actions or activities that one person performs for another (intangible) e.g manicure, car wash
The Four Factors of Production
Land |
Labour | Capital | Enterprise |
Non man-made natural resources are available for production. Some countries have a vast amount of a particular natural resource & so are able to specialise in its production e.g. oil, wood, fish, corn, iron ore |
The human input into the production process. Labour involves mental or physical effort. Not all labour is of the same quality. It can be skilled or unskilled. Some workers are more productive than others because of the education, training & experience they have |
Capital is any man-made resource that is used to produce goods/services e.g. tools, buildings, machines & computers |
Enterprise involves taking risks in setting up or running a firm. An entrepreneur decides on the combination of the factors of production necessary to produce goods/services with the aim of generating profit |
Some of the Factors of Production Required to Produce a Motor Car
Land |
Labour | Capital | Enterprise |
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car designer production director production line staff supply chain staff |
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CEO |
