Factors of Production

🏗️ Factors of Production

These are Resources used to produce or make goods/services.

There are 4 factors of production namely: land, labour, capital and enterprise.

Factor	Meaning	Examples	Reward
Land	Natural resources	Oil, forests, water	Rent
Labour	Human effort	Workers (skilled/unskilled)	Wages/salaries
Capital	Man-made tools ( manufactured resources)	Machines, vehicles	Interest
Enterprise	Organising the other factors, taking risks	Entrepreneurs	Profit

🧃 Example: Making Coca-Cola

• Land – water, sugar

• Labour – workers, admin staff

• Capital – factory, trucks, machines

• Enterprise – business skills to manage everything

🔁 Mobility of Factors of Production

Mobility = how easily resources can be changed or moved.

1. Geographical Mobility

• Can resources move location?

• Affected by:

  • Family commitments

  • Cost of living differences

  • Availability of housing

2. Occupational Mobility

• Can people change jobs easily?

• Affected by:

  • Training required

  • Skills and qualifications

More mobility = better productivity and growth for a country!

📈 Changes in Quantity and Quality of Resources

Things that can affect the availability and usefulness of land, labour, capital, and enterprise:

• 💸 Costs of production – e.g., higher wages may reduce demand for labour.

• 🏛️ Government policies – taxes, subsidies, education, and healthcare investments.

• 🤖 Technology – improves productivity.

• 🌍 Migration – increases labour supply.

• 🧑‍🏫 Better education/healthcare – improves quality of labour.

• ☀️ Weather conditions – affects agricultural output.

📝 Quick Revision Tips

• Always link scarcity to choice and opportunity cost.

• Use real-life examples in exams to show understanding.

• Remember the factors of production and their rewards—they often appear in MCQs and short-answer questions.

• Practice explaining the difference between needs and wants, and economic vs free goods—these are common exam topics.