Factors of production

Worked example 14 marks

1. 1
   1. Land: This includes the physical plot of land the restaurant is built on. It also includes natural resources used, such as tomatoes, flour (from wheat), and water for the dough.
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   1. Labour: This is the human effort involved. Examples include the chefs who make the pizzas, the waiting staff who serve customers, and the cleaners.
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   1. Capital: These are the man-made items used in production. For the restaurant, this would be the pizza oven, the cash register, the tables and chairs, and the delivery mopeds.
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   1. Enterprise: This is the skill of the owner who had the initial idea, raised the money, hired the staff, and organised all the other factors, taking on the risk of the business failing in the hope of making a profit.

Worked example 14 marks

1. 1
   1. Example 1: The physical plot of ground on which the houses are built. This is a direct use of land as a space for construction.
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   1. Explanation 1: This resource is a natural factor and is essential for providing the location for the finished product (the house).
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   1. Example 2: The raw materials used in construction, such as timber from forests, clay for bricks, and sand and gravel for concrete.
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   1. Explanation 2: These are all natural resources that are extracted from the earth and are therefore classified as 'land' in economics. Without them, the physical house could not be built.

Worked example 14 marks

1. 1
   1. Factor 1: Improved Education and Training. When the government or firms invest in better schools, universities, and vocational training schemes, workers acquire more skills and knowledge.
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   1. Explanation 1: This makes them more efficient and productive. For example, a computer programmer with advanced training can write better software more quickly, increasing their output.
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   1. Factor 2: Improved Healthcare. Better access to healthcare services leads to a healthier workforce that takes fewer sick days and has more physical and mental energy for work.
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   1. Explanation 2: A healthy worker is more productive than an unwell one. For example, construction workers who are physically fit can work more effectively and safely, improving the quality and speed of their work.

Worked example 14 marks

1. 1
   1. Robots: This is Capital. They are man-made machines used to help produce the cars.
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   1. Assembly line workers: This is Labour. They are the human workforce providing physical and mental effort.
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   1. Steel: This is Land. It is a raw material derived from iron ore, which is a natural resource.
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   1. Factory building: This is Capital. It is a man-made structure built to house the production process.

Worked example 23 marks

1. 1
   1. Definition of Capital: In economics, 'capital' refers to physical, man-made assets that aid production, such as machinery or tools.
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   1. Role of Money: Money, or finance, is not productive on its own. It cannot build a car or bake bread. It is a medium of exchange used to acquire the factors of production.
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   1. Conclusion: Therefore, the money in the bank is 'financial capital', but not the factor of production 'capital'. The firm uses the money to buy the real capital (e.g., a new computer), and it is the computer that is the factor of production.

Worked example 14 marks

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   1. Organising Role: Anita must first organise the other factors. She needs to rent or buy a premises (Land), purchase roasting machines and packaging equipment (Capital), and hire staff to operate the machinery and manage sales (Labour).
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   1. Decision Making: She will decide which coffee beans to buy, what prices to set, and how to market her product. This is a key part of the organising function.
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   1. Risk-Bearing Role: Anita is taking a significant financial risk. She may be using her own savings or a bank loan to start the business. If the business fails, she could lose this money.
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   1. Reward: If her business is successful and her revenues are greater than her costs, she will earn a profit. This profit is her reward for her entrepreneurial skills and for taking the risk.

Worked example 16 marks

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   1. Labour's Geographical Mobility: Labour is geographically mobile, but this mobility can be limited. A worker can move town or country for a job, but barriers like family ties, language differences, and housing costs can make this difficult.
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   1. Land's Geographical Mobility: Land is geographically immobile. A plot of land, a river, or a deposit of oil cannot be physically moved from one location to another.
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   1. Labour's Occupational Mobility: Labour's occupational mobility depends on skills and training. An unskilled worker can switch between different manual jobs easily (high mobility). A highly specialised worker like a brain surgeon has low occupational mobility as their skills are not easily transferable to other professions.
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   1. Land's Occupational Mobility: Land is often occupationally mobile. A piece of land can be switched from one use to another. For example, a field used for farming can be used to build houses, a factory, or a school.
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   1. Comparison: In summary, labour is generally more geographically mobile than land, which is immobile. However, land can often have higher occupational mobility than highly specialised labour, as it can be repurposed for many different uses.