![]() Another example is if a business has £5,000 and has to choose between using the money for a new advertising campaign or more training for its staff, they must weigh up the opportunity costs of picking one option over the other. CAPITAL (WORKING CAPITAL OR FIXED CAPITAL not just money) - man-made things used to manufacture goods and create services. For example this could be when a business must choose between two different office locations, they will face opportunity costs for the location they do not choose. It involves a nation’s qualified and unskilled labour force. Enterprise - This is the entrepreneur who takes a risk and creates the business using the other three factors of production.Īn opportunity cost is something that is given up in order to do something else. The four production factors are: Physical Capital Land Human Capital Labour The most significant element in production is human capital since it incorporates land, labour and physical capital and generates an output either for self-consumption or for sale. ![]() Capital - This is the machinery and equipment needed by the business to make the products or provide the service. The factors of production include land, labor, capital and entrepreneurship.Factors of Production Land is the natural resource that an enterprise uses to produce. Labour - This includes the staff needed by the business and the skills and qualifications they have. Factors of production are divided into four categories: land, labor, capital and entrepreneurship.This includes non-renewable resources such as gas and oil and renewable resources such as wind power. In economics, the factors of production are the separate elements that work together to create a good or service. Land, labor, capital and organization are the four factors of. Land - This includes the physical land where the business is located and also the natural resources that a business might need. factors of production it would be blassified as: o LD - Land. Factors of production are those means which help in the manufacture of goods and services.These are land, labour, capital and enterprise. But capital is the part of this wealth that is currently in productive use. Wealth is the sum of all money, goods, human values, etc that can be useful in the production of further wealth. There are four factors of production that a business needs to be able to produce their products or provide their service. Returns to Scale (Production Function) Production Optimisation Capital as a Factor of Production We can define capital as the productive part of a firm’s wealth.
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