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Basic Concepts and Population and Labour Force - Grade 11 Economics
- Course
- Economics
- Institution
- 11th Grade
Simplified notes on the factors of production and community decision-making.
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BASIC CONCEPTS AND POPULATION AND LABOURFORCE
The Factors of Production
• 4 Factors of production are the resources – inputs, that are used to produce goods
and services – outputs.
• THE 4 FACTORS:
1. Natural Resources
2. Labour
3. Capital
4. Entrepreneurship
• In a market system, most of the factors of production are privately owned.
• Each factor receives its own reward or remuneration:
- Natural Resources rent
- Labour wages
- Capital interest
- Entrepreneurship profit
----------- Natural Resources --------------------------------------------------------------------------
• Natural resources are things found in nature and is necessary or useful to humans.
Such as:
- Forests
- Mineral Deposits
- Fresh water
• Some of the characteristics of natural resources:
- Supply is limited.
- Not ALL natural resources are renewable.
- Distribution is not even.
- Used in the production of goods and services.
- Must be processed for further use.
, ➢ The Importance of natural resources
• Natural resources are important because they:
- Help the economic development of the country.
- Provides the basis for economic activities producing goods and services.
- Provide the owners of these resources with income.
- Create employment.
- Forms the basis for international trade.
➢ Remuneration of natural resources
• We use the term rent to describe the payment for all natural resources.
• Remuneration of factors of production is influenced by the following factors:
- An increase in the demand for a product or service.
- The quality of the natural resource.
- Climate.
- Technology
- Location.
---------- Labour --------------------------------------------------------------------------------------------
• Labour is work, either physical or mental, done by people for wages or a reward.
• Characteristics of labour:
- Labour varies in quality and quantity according to the workers.
- Labour can be classified as skilled, semi-skilled and unskilled.
- Developing countries have a large supply of unskilled workers.
- The geographical and occupational mobility of labour is low.
➢ Importance of labour
- The work force is responsible for the production in a country.
- A shortage of skills restricts the growth of the economy.
- Skilled workers tend to be more productive than unskilled workers.
- The supply of labour is determined by factors such as the population growth rate,
the labour force participation rate and migration.
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