BEDIR INTERNATIONAL HIGH SCHOOL

2022/2023 ACADEMIC YEAR

ECONOMICS
FORM 1

PRESENTED TO: BEDIR STUDENTS FORM 1 CLASS (TERM 1-2022/2023)

PRESENTED BY: MR. KEFA MWALE

SECTION 1: THE BASIC ECONOMIC PROBLEM

WEEK 3 AND 4

TOPIC: THE FACTORS OF PRODUCTION

Factors of production- Refers to the resources required produce
a good or service.
Categories of the factors of production:
l Land- refers to the natural resources required in the production
process (such as oil, coal, water, wood, metal ores and
agricultural products).
Land refers to all-natural resources which are free gifts of nature.
2 Labour- refers to the human resources required in the
production process (such as skilled and unskilled labour).
Human efforts done mentally or physically with the aim of
earning an income is known as labour.
3 Capital- refers to the manufactured resources required in the
production process (such as machinery, tools, equipment and
vehicles).
 Capital: the man-made resources that are u produce
goods/services (e.g. tractor)
All man-made goods which are used for further production of
wealth are included in capital
4 Enterprise- refers to the skills a business person requires to
combine and manage successfully the other three factors of
production and the ability to undertake risk.
 Enterprise: the skills and willingness to take the risks required
to organize productive activities
 Entrepreneurs organize and combine resources in firms to
produce goods and services
 Durable consumer goods last long while (e.g. furniture) non-
durable consumer goods (e.g. food) do not
 Capital goods and semi-finished goods or components are
used up in production
An entrepreneur is a person who organises the other factors and
undertakes the risks and uncertainties involved in the production.
 Consumers are people or firms who need and want goods and
services
 Resources or factors of production are used to make goods
and services
Example- the factors of production required in the production of
a can of Coca-Cola are as follows:
• Capital: machinery, tools, a factory building and trucks to
transport the drinks.
• Enterprise: the skills necessary to organise the production
process successfully and to motivate workers so that they work
to the best of their ability.
• Labour: people to work on the production line, perform
administrative tasks and manage the company.
• Land: the natural resources required to make Coca-Cola (such
as sugar, water and caffeine)
Rewards for factors of production
 Capital - Human-made goods that are used in the production
of other goods.
 A reward for Capital is Interest.
 Entrepreneurs (Enterprise) - The person who takes the risk and
has the skills to combine the other factors of production to
produce goods and services.
  A reward for Enterprise is Profit.
 Labour - Human work or effort and the people who offer their
services to businesses in exchange for wages.
 A reward for Labour is Wages or Salaries.
 Land - Any resource that exists as part of a natural process.
 A reward for land is Rent
Collectively, the four rewards for factors of production are
known as Income.
The mobility of factors of production- refers to the extent to
which resources can be changed for one another in the
production process.
Categories of labour mobility
 Geographical mobility
 Occupational mobility
Geographical mobility – refers to the extent to which labour is
willing and able to move to different locations for employment
purposes.
Reasons for geographical mobility
 Family ties and related commitments
 Costs of living
Occupational mobility – refers to the extent to which labour is
able to move between jobs.
  Retraining and up skilling help workers to improve
occupational mobility.
Causes of changes in the quantity and quality of factors of
production
1. Change in demand of land, labour, capital and enterprise
2. Change in supply of land, capital, labour and enterprise.
3. Changes in the costs of factors of production
4. Government policies can affect the costs of production, such
as through the use of taxes and subsidies.
5. New technologies allow firms to produce more output
6. Net migration of labour will affect the quantity of labour in the
economy
7. Improvements in education and healthcare will improve the
quality of labour as workers become more valuable to firms.
This helps to boost production.
8. Unfavourable weather conditions will reduce the supply of
agricultural products. Conversely good weather conditions
will increase supply, thus increasing agricultural output.
Ceteris paribus is a Latin for: ‘All other things remaining equal’