Factors of production Cambridge IGCSE Economics revision
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In plain words
To make anything you need four kinds of resource. Land is everything nature provides. Labour is people's work. Capital is the equipment made by people to help produce other things. Enterprise is the person who brings the other three together and takes the risk.
Each factor earns its owner a reward. That is where incomes come from.
5 things to know
- Land: natural resources, such as fields, oil, fish and water. Its reward is rent.
- Labour: human effort, physical and mental. Its reward is wages.
- Capital: human-made goods used to produce other goods, such as machines, tools, factories and lorries. Its reward is interest.
- Enterprise: organising the other factors and bearing the risk. Its reward is profit.
- The quantity of a factor can change (more workers through immigration, new oil found). So can its quality (better education and training, better technology).
Tips and tricks
- Capital in economics means equipment, not money. Money is how you buy capital.
- Match each reward to its factor exactly: rent, wages, interest, profit. Mixing them up loses easy marks.
It lands in your notebook with its questions as flashcards.
Factors of production: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
Which factor of production is a fishing boat?
It is a human-made good used to produce something else. The fish in the sea are land.
What is the reward for enterprise?
Profit is the reward for organising production and taking the risk.
Which of these is land?
Land is any natural resource.
A country opens new training colleges. Which change does this bring?
Training makes workers more skilled: the same people, but better.
Which pair is correct?
Land earns rent, labour wages, capital interest and enterprise profit.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 7 marks. Write your answers on paper, then check them.
Factors of production
Cambridge IGCSE Economics 0455 · 7 marks · papermunch.org
Name ______________________________ Date ______________
State the four factors of production.[2]
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Land, labour, capital and enterprise.
A bakery buys a new oven. Identify the factor of production and its reward.[2]
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Capital. Its reward is interest.
Explain two ways a country could improve the quality of its labour.[3]
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Education makes workers more knowledgeable, and training gives them job skills, so each produces more. Better healthcare also keeps workers fit and at work.
Answers: Factors of production
- 1. Land, labour, capital and enterprise.
- 2. Capital. Its reward is interest.
- 3. Education makes workers more knowledgeable, and training gives them job skills, so each produces more. Better healthcare also keeps workers fit and at work.