FACTORS OF PRODUCTION

Factors of production play a vital role  in the economy. They are land, labour, capital and enterprise (management).

Land is a resource supplied to man by nature. It includes the surface of the land and what lies under it, such as coal, oil, gold, copper, tin and so on. It also comprises the vegetation growing on the land and the animals feeding on that vegetation, and also the fish in the seas, the air we breathe and the chemicals in and around the land. It is of course the starting point for all the production processes. The raw materials used in that production and the food which the labour eats to survive are all obtained from the land.

Labour is the factor of production which provides the physical and mental effort for the production processes. Labour is a relatively immobile factor of production, as most workers in the lower part of the occupational structure, such as unskilled workers, semi-skilled workers and skilled workers, do not want to move from one area to another to seek alternative employment.

Capital is a man made resource and is such things as machines, roads, buildings, hospitals, schools and other things which can be used to produce goods and provide services. The more capital an economy has, the more goods and services it is able to provide.

Enterprise is the factor which coordinates the other factors of production, so that the finished goods may be manufactured.

The factors of the economy are sometimes referred to as:

        1. primary sector; 2. secondary sector; 3. tertiary sector.

The primary sector is the raw materials which used to produce the goods. The secondary sector is the manufacturing sector of the economy. The tertiary sector is the Aids to trade such as banking, transport, insurance, advertising, tourism etc.

Choose the right variants to complete the sentences:

1. ... form part of the factor of production called land.

     a) Machinery

     b) Farm buildings

     c) Forests

2. Mental and physical effort is provided by ... .

     a) capital

     b) labour

     c) enterprise.

3. ... includes machinery and buildings .

     a) Capital

     b) Land

     c) Management