The factors of production

A person purchased a shop and filled it with fresh fruit. He hired one family member to assist in the shop. Which factors of production have been used?

Feb/March 2017

What is one example of buying a capital good?

Feb/March 2018

What does not count as a factor of production?

Feb/March 2020

Sanjay, who is a risk taker, opens a restaurant in Chennai. He also works in the business as a chef. He leases the restaurant building from Raghav and employs him to serve the customers. Which income is earned by Sanjay and Raghav?

Feb/March 2021

What counts as the factor of production called land?

Feb/March 2025

Estonia uses its factors of production across a variety of industries, such as education. In 2022, the nation faced a shortage of teachers. To draw workers in from other industries, the government raised teachers’ wages. Two further industries in Estonia are building and clothing. Estonia’s firms were affected in 2022 when the government increased the money supply.

Feb/March 2025

The four examples below show how factors of production may be used. Which one is most likely to make the greatest use of the factor enterprise?

May/June 2015

At what point is one firm judged to be more capital-intensive than another firm?

May/June 2015

Every factor of production receives an income. What income is paid to capital and to enterprise?

May/June 2015

Several farmers set up a partnership. They purchase extra machinery, which they use jointly to produce cereals. What is one advantage of using more machinery?

May/June 2015

What factor of production is shown by a rise in the number of manufacturing robots used in the car manufacturing sector?

May/June 2016

Which firm is likely to have the greatest difficulty in increasing the use of its main factor of production?

May/June 2016

Which option is not a factor of production?

May/June 2017

Which of the following statements about factors of production is correct?

May/June 2017

What would an economist regard as the factor of production called land?

May/June 2018

Which item would count as the factor of production capital for an airline?

May/June 2018

The use of robots has meant that many firms now need fewer workers to make their goods and provide their services. From this statement, which factor of production is taking the place of workers?

May/June 2018

What change would lead a manufacturing company to substitute labour for capital in order to preserve the most efficient mix of factors of production?

May/June 2018

What would an economist consider an example of the factor of production capital?

May/June 2019

A government wants to raise agricultural output. It provides farmers with equipment so that they can irrigate their fields. Which factors of production are supplied by the farmers?

May/June 2019

In what way does capital-intensive production differ most from labour-intensive production?

May/June 2019

In farming, what is one example of what economists refer to as capital?

May/June 2019

What measure could an economy adopt to produce a wider variety of products?

May/June 2019

Which statement concerning the factors of production is correct?

May/June 2021

Consumers in Uruguay are consuming more processed food. Factors of production, including enterprise, have adjusted to this shift. Firms in the processed food industry have become more capital-intensive. All of Uruguay's industries were influenced by the rise in its inflation rate, from 6.2% in 2017 to 7.7% in 2018.

May/June 2021

Which government measure would not directly increase the number or the quality of human resources?

May/June 2022

What might result in greater demand for a factor of production?

May/June 2022

Which factor is paired with the correct factor reward?

May/June 2022

Which change is most likely to raise enterprise as a factor of production within an economy?

May/June 2023

Study the source material closely before you answer Question 1. Source material: Is there a future for Australian coal? Australia is one of the world's major coal producers. Most of this coal is burned to generate electricity, and carbon dioxide is released in the process. In recent years, worldwide demand for coal has decreased because countries have tried to cut pollution. As a result, there has been a move towards alternatives such as gas, offshore wind and solar power. Coal is extracted in all six of Australia’s states, although the greatest output comes from Queensland and New South Wales. In Queensland, some firms are extremely large. They hire both low-paid, unskilled staff and highly paid specialist mining engineers, site managers and accountants. These firms rely on the newest excavators, mining drills, crushing equipment, earth movers and drones to spot maintenance problems. Coal may be kept in storage so that firms can respond to changes in market conditions, but storage can be costly. It can also take several years to build a new coal mine. Table 1.1 gives the output and consumption of the seven biggest producers in 2020. World coal production has dropped in recent years as most countries have switched to renewable energy. Even so, coal output is expected to rise in some countries. For instance, both Australia and India plan to open new coal mines. The Indonesian government fixes a maximum coal price so that its power stations are encouraged to use coal. The Australian coal industry adds to government tax revenue. However, Australia’s budget balance is also affected by other factors, including changes in tax rates and state assistance for some industries in the country.

May/June 2023

A busy restaurant uses a large team of highly skilled chefs to prepare high quality meals one by one. What is one advantage to the restaurant of using this type of production?

May/June 2024

What items would be counted under the factor of production called land?

May/June 2024

A firm decides to become more capital-intensive. What is least likely to have risen?

May/June 2025

Sonia runs a takeaway food delivery business. She plans to grow the firm by purchasing more vans and employing extra drivers. Which factors of production did this change?

May/June 2025

A university turns down 2000 qualified applicants who want to study there. Which factor of production might have led the university to make this decision?

May/June 2025

Which item is not a factor of production?

May/June 2025

Over the last few years, the amount of Latvia’s factors of production has altered. Since 2008, capital has risen and land has stayed broadly unchanged, whereas the labour force and enterprise have both fallen. Enterprise and supply conditions can influence the prices firms charge. In 2022, the Latvian Government raised the country’s national minimum wage (NMW). Even so, its NMW still remained among the lowest in the European Union.

May/June 2025

A business owner hires two workers to prepare sandwiches for sale in a cafe. Besides labour, which factors of production are used in this activity?

Oct/Nov 2015

Within a rural Southern African community, women carried out planting and hand-weeding of crops, whereas men controlled production and took the profits. Which combination of factors of production was being used?

Oct/Nov 2015

Governments often attempt to affect the supply of factors of production in their economies. Which factor’s supply is a government least likely to be able to increase?

Oct/Nov 2015

In developed economies, production has shifted from labour-intensive methods to capital-intensive methods. Which kind of activity is still labour-intensive?

Oct/Nov 2015

Every factor of production receives an income. Which option correctly gives the incomes for labour and capital?

Oct/Nov 2016

Which item is not regarded as a factor of production?

Oct/Nov 2016

As laser eye surgery develops, the demand for spectacles is falling in several countries. Sight problems are being treated with more capital equipment and less labour. Some economists predict that opticians’ wages may decline in the future. If wages fall, some opticians may be prompted to retrain for other occupations.

Oct/Nov 2016

A self-employed fortune teller makes a living by examining the palms of people’s hands. Which factors of production are needed for this activity?

Oct/Nov 2017

Economists use the term factors of production. Which of the following is not a factor of production?

Oct/Nov 2017

What change would cause a manufacturing company to substitute labour for machines in order to keep the most efficient mix of factors of production?

Oct/Nov 2017

What is meant by the factor of production known as capital in economics?

Oct/Nov 2017

Private multinational clothing companies set up operations in developing countries in order to lower their average production costs. Which characteristic of developing countries makes them attractive for this purpose?

Oct/Nov 2017

Which factor of production includes risk-taking?

Oct/Nov 2018

Which factor of production is missing from the list below? bananas; a factory; goats; a risk taking investor

Oct/Nov 2018

Which of the following is the correct example of a factor of production in the fishing industry?

Oct/Nov 2018

Which item is classified as one of the four economic resources?

Oct/Nov 2019

Which of the following statements about factors of production is correct?

Oct/Nov 2019

Which rise is most likely to result in higher output in an economy?

Oct/Nov 2019

Innovation depends directly on which factor of production?

Oct/Nov 2020

Which pairing of a factor of production with its factor income is incorrect?

Oct/Nov 2020

What is the main role of an entrepreneur?

Oct/Nov 2020

What is one benefit of labour-intensive production and what is one benefit of capital-intensive production?

Oct/Nov 2021

An airline requires staff and equipment. These may be grouped into factors of production. What is matched to the correct factor of production?

Oct/Nov 2022

An airline requires both workers and equipment. These may be grouped under factors of production. What belongs to the correct factor of production?

Oct/Nov 2022

An airline requires staff and equipment. These may be grouped into factors of production. Which item has been matched to the correct factor of production?

Oct/Nov 2022

Case-study source: Changes in Ecuador’s economy Ecuador fact file Population: 18m (2019) Number of Ecuadorans living and working abroad: 3m (2019) Change in price in Ecuador’s oil (2014-2016): -50% Change in supply of Ecuador’s oil (2014-2016): -8% Oil accounts for one third of Ecuador’s exports. However, Ecuador has chosen to make less oil and to produce more of other goods and services. This choice has changed the way products are made in Ecuador. For instance, luxury textile output, such as luxury scarves and jumpers, uses fewer capital goods than oil production does. Tourism depends on natural resources, including sunshine and beaches. A reason why Ecuador’s government has promoted less dependence on oil is the big swings that often happen in the oil market. From 2014 to 2016, demand for Ecuador’s exports fell, which led to a marked drop in export revenue. That fall, together with lower government spending, caused the country’s output to shrink. From 2016 to 2019, Ecuador’s economy showed some recovery. Incomes and household spending rose and more cars were bought. Table 1.1 gives the GDP per head ($) and car ownership (per 1000 people) in selected countries in 2019. Table 1.1 GDP per head ($) and car ownership (per 1000 people) in selected countries 2019: Ecuador: GDP per head $6200, Car ownership 160 New Zealand: GDP per head $44 000, Car ownership 865 Senegal: GDP per head $1600, Car ownership 50 Spain: GDP per head $32 000, Car ownership 650 Switzerland: GDP per head $83 000, Car ownership 720 Uruguay: GDP per head $18 000, Car ownership 300 Ecuador’s government took out loans from China to finance the building of more roads. Constructing these roads created jobs and was expected to affect transport costs in the long run. From 2016 to 2019, Ecuador’s textile industry gained from the improved road network. Even though foreign textile firms were strong competitors, Ecuador’s textile firms expanded production. Wages in the textile industry did not increase much. A very small rise in wages can influence trade union activity and emigration. Some Ecuadorian workers migrate to look for jobs in other countries, especially Italy, Spain and the US. These workers have different skills and do a range of jobs overseas, some of which offer training. Many, though not all, send money back to their families.

Oct/Nov 2022

What does capital mean?

Oct/Nov 2023

In high-income economies, cereal farming is very productive, yet it employs only a small number of workers. What might explain this employment pattern?

Oct/Nov 2023

A railway track belongs to what type of factor of production?

Oct/Nov 2023

For which case can the level of reward be fixed before production begins for the first factor of production but not for the second factor?

Oct/Nov 2024

African economies could experience strong economic growth due to a substantial rise in their working-age population. On the basis of this idea, which factor of production is most likely to increase greatly?

Oct/Nov 2024

An airline’s management chose to swap its aeroplanes for more technologically advanced aircraft. At the same time, the firm retrained its pilots. Which factors of production has the airline improved?

Oct/Nov 2024

Read the source material thoroughly before you answer Question 1. Source material on The United Arab Emirates (UAE) UAE fact file (2021): Population 10m; Foreign nationals living in the UAE 8.9m; Number of people unemployed 0.2m; Economic growth rate 3.8%. There are more foreign nationals living in the UAE than citizens of the UAE. Labour mobility between the UAE and other countries is high, with many daily flights, for instance, arriving in the UAE from India and Pakistan. The UAE hosted the World Expo in 2021-2022, when countries from every part of the world displayed their economic achievements. A major feature of the World Expo was the stronger links between people through migration, the exchange of goods and services, and the sharing of ideas. Another repeated theme at the World Expo was technological progress, which has raised global living standards. In the UAE, technological development has increased both the quality and the quantity of the factors of production. This technological progress was backed by a very large amount of finance obtained from oil production and oil exports. Oil is a necessity and its price inelasticity of demand has created both benefits and drawbacks for the economy. Figure 1.1 shows the annual percentage change in the oil price and the annual percentage change in the UAE’s balance on the current account of the balance of payments. Figure 1.1 text: Vertical axis labelled “% change” with scale at 150, 100, 50, 0, -50, -100. Horizontal axis labelled “Year” with years 2016, 2017, 2018, 2019, 2020, 2021 and 2022. A solid line represents “annual % change in the price of oil”. A dashed line represents “annual % change in the UAE’s balance on the current account of the balance of payments”. Caption: “Figure 1.1 Annual percentage change in the price of oil and the annual percentage change in the UAE’s balance on the current account of the balance of payments 2016-2022”. Dubai, which is one of the cities in the UAE, does not rely on oil because 95% of its economy is non-oil based. Dubai has an international reputation for luxury tourism and financial services, and these affect employment, tax revenues and export revenues. However, there are worries about sustainable water use in a desert environment and about the size of income inequality. Even though the economy has changed rapidly, the value of the domestic currency, the dirham, has remained very steady because the government has kept a fixed exchange rate system since 1980. This has supported confidence among investors in the economy. However, a fixed exchange rate influences the government’s capacity to achieve other macroeconomic objectives. Answer every part of Question 1. Use the source material in your answers.

Oct/Nov 2024