Economics 9708 · AS & A Level
Factors of production
100 practice questions on Factors of production, with worked solutions and instant marking.
The diagram illustrates a firm’s average physical product of labour and marginal physical product of labour curves. What conclusion can be drawn from the diagram?
Feb/March 2016
What is meant by the transfer earnings of the factor enterprise?
Feb/March 2016
What is the key requirement for the effective operation of the division of labour in a modern economy?
Feb/March 2017
If a firm doubles its variable inputs while its fixed inputs remain unchanged, and output rises by less than double, what does this demonstrate?
Feb/March 2017
The table gives the number of employees in four firms operating in the same industry, the average number of hours worked per day, and the total output produced by each firm each day. Which firm has the most productive workers?
Feb/March 2018
Which result is influenced by the division of labour?
Feb/March 2019
What do the transfer earnings of the factor enterprise indicate?
Feb/March 2019
Which diagram shows the correct relationship between average product (AP) and marginal product (MP) of labour, assuming the amounts of all other factor inputs stay constant?
Feb/March 2022
The statement and the table give details about a production function. A production function shows the quantity of ......1...... that can be achieved from each pairing of ......2...... and may be used to provide information about ......3...... . Which words correctly fill gaps 1, 2 and 3?
Feb/March 2024
In what circumstances is division of labour likely to work most effectively?
Feb/March 2025
Explain how enterprise and division of labour contribute to an economy.
May/June 2007
Explain how division of labour can influence labour productivity.
May/June 2010
How is capital different from the other factors of production?
May/June 2011
In what way is capital different from the other factors of production?
May/June 2011
How is capital different from the other factors of production?
May/June 2011
Explain why the successful operation of the division of labour relies on the use of money.
May/June 2011
Which diagram accurately illustrates the link between the average product (AP) and the marginal product (MP) of labour, assuming the quantities of all other factor inputs stay unchanged?
May/June 2011
What is the term for the link between a firm’s output and the amounts of factor inputs it uses?
May/June 2011
Which diagram accurately illustrates the connection between the average product (AP) and the marginal product (MP) of labour, assuming the quantities of all other factor inputs stay unchanged?
May/June 2011
What is the term for the relationship between a firm’s output and the amounts of factor inputs it uses?
May/June 2011
Which diagram correctly illustrates the connection between the average product (AP) and the marginal product (MP) of labour, assuming the amounts of all other factor inputs stay unchanged?
May/June 2011
What term is used to describe the relationship between a firm’s output and the quantities of factor inputs that it uses?
May/June 2011
Explain whether the factors of production are always equally important in economic terms both within and between economies.
May/June 2012
The diagram illustrates the total product of labour curve for a firm whose sole variable factor input is labour. What accounts for the curve’s shape?
May/June 2012
The diagram illustrates the total product of labour curve for a firm in which labour is the only variable factor input. What accounts for the curve’s shape?
May/June 2012
Which outcome is most likely to arise from the division of labour?
May/June 2013
Give two reasons why palm oil matters for the economy of Malaysia.
May/June 2013
The table presents chair output at a factory for different numbers of workers employed. Diminishing marginal returns to labour will begin when
May/June 2013
The table sets out the inputs of the two factors of production, capital and labour, required to generate different output levels. For which output range do decreasing returns to scale take place?
May/June 2013
The diagram’s curve shows the lowest combinations of capital and labour required to make 100 units of output. To produce 100 units of output, a firm’s management chooses the capital-and-labour combination marked by point G in the diagram. Which term most accurately describes this situation?
May/June 2013
A fashion model earns $100 000 a year. The highest-paid alternative job she could obtain is a teaching job at $60 000 a year. Determine her transfer earnings and her economic rent.
May/June 2013
The table summarises the firm’s current position in a perfectly competitive industry. factor X marginal physical product 2 factor price $5.00; factor Y marginal physical product 4 factor price $10.00 If the firm sells its product at $3 and wants to maximise profits, which factor should it employ?
May/June 2013
The table gives the number of chairs made in a factory for different workforce sizes. number of workers 0,1,2,3,4,5; number of chairs produced 0,7,17,26,34,40 Diminishing marginal returns to labour will begin when
May/June 2013
Meera has recently completed a course at art college and has chosen to start her own business making clay models of well-known people. Which factors of production will she probably need to buy from other businesses?
May/June 2014
A firm uses two factors of production, capital and labour. The curves in the diagram indicate the various combinations of capital and labour that a firm requires to produce specified output levels. What is represented by the diagram?
May/June 2014
The table presents chair output at a factory as varying numbers of workers are employed. Diminishing marginal returns to labour will start when
May/June 2014
A firm uses two factors of production, capital and labour. The curves in the diagram indicate the various combinations of capital and labour needed by a firm to generate given levels of output. What is shown by the diagram?
May/June 2014
Explain how the contribution of each factor of production differs in an agricultural economy from that in an industrialised economy.
May/June 2015
The diagram illustrates the total product of labour (TPL) curve for a firm where labour is the sole variable factor input. What accounts for the curve’s shape?
May/June 2015
What connection is described by a firm’s long-run production function?
May/June 2015
A firm operating in a perfectly competitive industry uses two factors of production, X and Y. The table sets out the factor price and the current marginal physical product of these two factors. If the firm sells its product for $1 and intends to maximise profits, what should it do?
May/June 2015
An actor receives $100 000 a year. The best-paid alternative job he could obtain is as a lecturer. He believes that he is currently earning an economic rent of $40 000. What wage could he receive as a lecturer, and what are his transfer earnings?
May/June 2015
When working out a firm's short-run supply schedule, what is taken to stay constant?
May/June 2016
What is required for specialisation to be effective?
May/June 2016
Outline the functions of the factor enterprise in a modern economy, and explain how enterprise reacts to a rise in demand for a good.
May/June 2016
A firm hires a worker who contributes less to output than the worker hired before. What situation does this show?
May/June 2016
A firm is operating in a perfectly competitive market. Why does the marginal revenue product of a factor of production used by the firm decrease as a larger amount of that factor is employed?
May/June 2016
The diagram illustrates a firm’s total product of labour (TPL) curve. Which statement is correct?
May/June 2016
Explain the role of the factor enterprise in allocating resources in a market economy when the demand for a good rises. Use a diagram to support your response.
May/June 2017
A firm is producing at the highest point on its average product curve. What must therefore be true?
May/June 2017
How is ‘the payment made to a factor of production over and above that necessary to keep the factor in its present use’ defined?
May/June 2017
A firm alters the kind of product that it makes. What could restrict the firm’s capacity to apply division of labour?
May/June 2018
State and explain two factors of production required for the manufacture of chocolate. Explain the benefits of specialisation in the manufacture of chocolate.
May/June 2018
An engineer receives $100 000 each year. The best alternative paid job she could obtain is a teaching position paying $60 000 a year. What are her transfer earnings and her economic rent?
May/June 2018
What would lead to an increase in the productivity of labour?
May/June 2018
India is not achieving its full economic potential because its rail, road and electricity infrastructure is weak, and there are too few skilled civil engineers. Which factors of production must be increased?
May/June 2019
Which diagram accurately illustrates the relationship between the average product (AP) and the marginal product (MP) of labour, assuming that the quantities of the other factor inputs stay unchanged?
May/June 2019
The diagram illustrates how a firm's total output varies with the amount of labour in the short run. What conclusion can be drawn about the firm?
May/June 2019
What is unable to be altered in the short run?
May/June 2019
What does the term division of labour mean?
May/June 2020
A factory sets up an automated production line to make use of division of labour. What is most likely to rise?
May/June 2020
A firm is operating in a perfectly competitive market. Why does the marginal revenue product of a factor of production used by the firm decrease as additional units of the factor are employed?
May/June 2020
What payment is made for using capital?
May/June 2021
A UK-based food company plans to broaden its product range. To fund this, it has secured a $10m loan from a bank to purchase land, construct and equip a bakery. Which of the following would not be regarded by an economist as a factor of production?
May/June 2021
According to economists, what is regarded as the reward for bearing risk and organising production?
May/June 2021
What does the term economic rent mean?
May/June 2021
Which term presupposes the existence of ‘qualities, knowledge and skills’ that enable an individual to become more productive?
May/June 2022
Which item represents the transfer earnings of the factor enterprise?
May/June 2022
What does the term transfer earnings mean?
May/June 2022
What does the phrase ‘a produced means of further production’ mean?
May/June 2023
A factory produces chairs. The production process is split into several tasks. What is a likely drawback of this division of labour?
May/June 2023
Which factor of production is required first to establish a new business?
May/June 2023
If all other factors remain unchanged, which change in an economy’s labour market would make the production possibility curve shift to the left?
May/June 2023
Which outcome is not likely to arise from the use of division of labour?
May/June 2023
The production schedule shows how total output changes as up to five workers are employed each week. What is the marginal product when average product per worker is 7.0 units?
May/June 2023
The character of a typical car assembly plant has altered. There are now fewer firms in the industry, production takes place on bigger sites and more machinery is automated. How would this change be most likely to have influenced the relative use of factors of production in the industry?
May/June 2024
Which item would be the least likely to be classified as land?
May/June 2024
What factor would promote a greater degree of division of labour?
May/June 2024
What factors would cause a country’s optimum population to become larger?
May/June 2024
Explain why unemployment is hard to measure accurately.
Oct/Nov 2005
Explain why a country might experience rapid economic growth.
Oct/Nov 2007
Why is the demand for OTR tyres said to be a derived demand?
Oct/Nov 2008
Tom has started his own business, which operates from premises that belong to Fanda. Every machine is rented from an equipment company. Tom and Fanda both work for the business. What term describes the income of Tom and Fanda?
Oct/Nov 2009
What factors could cause a country’s labour force to grow in size?
Oct/Nov 2009
Tom has started his own business, operating from premises owned by Fanda. All of the machinery is hired. Both Tom and Fanda work in the business. What term describes the earnings of Tom and Fanda?
Oct/Nov 2009
Which statement describes a case where an increase in the input of factor X, with every other factor held constant, leads to no change in a firm’s output?
Oct/Nov 2009
The table gives the amounts of the two factors of production, capital and labour, required to make different output levels. For which output range do increasing returns to scale take place?
Oct/Nov 2009
Which statement describes a case where increasing the input of factor X, while every other factor remains unchanged, causes no alteration in a firm’s output?
Oct/Nov 2009
Explain how microeconomic and macroeconomic issues can be shown with production possibility curves.
Oct/Nov 2010
A firm operating in a perfectly competitive industry uses two factors of production, X and Y. The table lists the factor price and the current marginal physical product for each of these factors. factor X has a price of $2.50, MPP 2; factor Y has a price of $6.00, MPP 8. If the firm sells its product at $1 and wants to maximise profits, what should it do?
Oct/Nov 2010
In the diagram, the curve indicates the different combinations of labour and capital that may be used to achieve a particular output level. A firm selects the mix of labour and capital represented by point X on the curve. What might account for the firm subsequently selecting the mix of labour and capital shown by point Y?
Oct/Nov 2010
In the diagram, the curve represents the different mixes of labour and capital that may be used to produce a specified level of output. A firm selects the mix of labour and capital indicated by point X on the curve. What might account for the firm then selecting the mix of labour and capital shown by point Y?
Oct/Nov 2010
Within a perfectly competitive industry, a firm uses two factors of production, X and Y. The table gives the factor price and the present marginal physical product for these two factors. factor X factor Y factor price $2.50 $6.00 marginal physical product 2 8 If the firm sells its output at $1 and wants to maximise profits, what action should it take?
Oct/Nov 2010
On the diagram, the curve illustrates the different combinations of labour and capital that may be used to achieve a particular level of output. A firm selects the labour-and-capital mix represented by point X on the curve. What might account for the firm subsequently selecting the labour-and-capital mix shown by point Y?
Oct/Nov 2010
Since Sealand has abundant land and labour, and Fantasia has more labour than Sealand, while X requires much land but little labour and Y requires much labour but little land, what can be inferred about Sealand?
Oct/Nov 2011
What is one illustration of the factor of production known as capital?
Oct/Nov 2011
Which factor of production is paired correctly with its example?
Oct/Nov 2011
The world is made up of Sealand and Fantasia. Both countries make two goods, X and Y. Good X requires a lot of land but only a small amount of labour. Good Y requires a lot of labour but only a small amount of land. Sealand has abundant land and labour. Fantasia has more labour than Sealand. What can be deduced from the above about Sealand?
Oct/Nov 2011
What is one example of the factor of production known as capital?
Oct/Nov 2011
Which statement explains how the law of variable proportions operates?
Oct/Nov 2011