ECONOMICS
AS Level
Crysler Diaz Tumale
Basic Economic Ideas and Resource
Allocation (AS Level)
Unit 01
Chapter 3 - Factors of production
In this chapter you will learn how to:
● define the meaning of the factors of production: land, labour, capital
and enterprise
● explain the importance of the factors of production
● describe the rewards to the factors of production
● explain the difference between human capital and physical capital
● explain the division of labour and specialisation
● explain the role of the entrepreneur in the organisation of the
factors of production in 21st century economies and as a risk taker.
Awesome words
Take note of the meaning of the following key terms:
● Entrepreneur ● Economic growth
● Land ● Lower middle-income countries
● Labour ● Human capital
● Low-income countries ● Specialisation
● Capital ● Division of labour
● Enterprise ● High-income countries
● Physical capital
Refer to your coursebook page 16-20
How did they make it?
The word “factor” means something that can
influence/affect the outcome/results of something.
Factors of production
Enterprise
Factor of production Definition Reward
Land Natural resources Rent income (or the payment
of extracted resources)
Labour Physical and mental human Wage
effort
Capital Man-made resources Financial return in the form of
(combined with land and labour interest or income if the
to produce goods and services capital is rented
that are required)
Enterprise A form of human capital that has Profit
two main functions - organises
the other factors of production
to produce goods and services
and takes risks in order to make
profit
Quantity and quality of factors of production are
considered to be the most important source of economic
growth, but always remember that quality is more
important than the quantity.
Choose a type of Identify four
product (e.g. examples of factors
clothing, food, Group Activity of production
furniture, electrical (resources) that
equipment). could be used to
produce the product
and how these
factors might be
used to fulfill the
group’s needs and
(Each group will present and explain their own work.) wants.
Independent Activity
Worksheet 2023.08.11 - AS Level
“No one is self-sufficient”
Specialisation gives rise to the need of
markets, to trade surpluses and shortages
and money, as means of exchange.
We are the specialists
Division of Labour
Advantages Disadvantages
- Time saving - Dependency on others
- Application of technology - Dependency on technology
- Increase in skill (new) - Boredom, mistakes
- Increased productivity - Loss skills (old)
- Higher earnings - Unemployment (effect of
dehumanising production
technique
Entrepreneurs are individuals who:
● organise production by putting together the various factors of production to form
a business opportunity
● are prepared to take risks by using their own money or by borrowing from the
bank/other people to achieve their ambitions.
Thank you!
Always strive to be the best
version of yourself!
