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Class notes Economics (9708)
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Chapter 3: Factors of production, these are short notes for the current syllabus for economics examination CIE 9708
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CAIE Economics (9708)(UNIT 1) CH. 3 Factors of production
• Definition of Factors of production
• Factors of production: Land, Labour, Capital, Enterprise
• Two main functions of Enterprises
• Differences of human capital and physical capital
• Definition of specialization
• Advantages and disadvantages of specialization
• Definition of Division of Labour
• Advantages and disadvantages of division of labour
• Definition of Entrepreneur
• Skills and qualities of an entrepreneur
Factors of Production
The limited resources (inputs) = Factors of production
Owners of factors of production will create goods and services to fulfill the needs and
wants for the economy while they receive in turn payments when the factors are being
used.
1. Land
This is a natural resource. Example; oil, coal, river, sand.
The quality of land is very important due to the occurrence of climate changes.
Reward – rent/ income that owners of the land receive.
2. Labour
These are the human resources available, both quantity and quality are important in
Labour, reasons why:
• Low-income countries- larger populations often suffer from lack of training and
education = not all available for work (due to being too young, choosing not to
work due to social reasons, lack of skills) = Low labor.
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