factors of production.ppt
TRANSCRIPT
-
8/10/2019 Factors of production.ppt
1/14
Factors of production Resources used for production
Types: Land
Capital
Labour
Entreprenuership
-
8/10/2019 Factors of production.ppt
2/14
Land Natural resources
Characteristics A gift of nature
Limited in supply
Land is immovable
The supply of land involves no opportunity
cost
-
8/10/2019 Factors of production.ppt
3/14
Capital Man-made resources used for further
production
Examples: machines, raw materials, tools
Features:
Man made
It raises the productivity of other factors
-
8/10/2019 Factors of production.ppt
4/14
Land or Capital? Ice at Mount Everest
Ice in a skiing field
Sea water
Sea water in a seafood restaurant
Sharks in the Atlantic Ocean Sharks at the Ocean Park
-
8/10/2019 Factors of production.ppt
5/14
Human Resources
Labour
Entreprenuership
-
8/10/2019 Factors of production.ppt
6/14
Labour Supply Measured in terms of time (man hour)
Labour supply = no. of workers x no. of
working hours per worker
-
8/10/2019 Factors of production.ppt
7/14
Labour Supply Measured in terms of time (man hour)
Labour supply = no. of workers x no. of workinghours per worker
Factors affecting labour supply:
Size of population
Size of working population
No. of working hours
-
8/10/2019 Factors of production.ppt
8/14
How to increase labour supply? population growth (by natural growth or
immigration)
monetary rewards import of labour from other countries
retirement age (e.g. from 60 to 70)
school leaving age (e.g. from 16 to 17)
-
8/10/2019 Factors of production.ppt
9/14
Labour productivity Measured in terms of output per unit of
labour
Average labour productivity = average output per man hour
June 2005 Firm A Firm B
Number of working hours per worker 240 180
Units of output 7200 6400Average labour productivity 30 35.6
Firm B has a higher labour productivity than firm A
-
8/10/2019 Factors of production.ppt
10/14
How to raise labour productivity? Better education and training
Other factors of production( quantity &quality)
Better management or organization. e.g.division of labour
Better working conditions Greater fringe benefits (housing
allowances,medical care,bonus, meal..)
-
8/10/2019 Factors of production.ppt
11/14
Mobility of Labour Geographical mobility: the ease at which
labour can move from one working place to
another.
Occupational mobility: the ease at which
labour can change from one type of job to
another
-
8/10/2019 Factors of production.ppt
12/14
Factors affecting occupational
mobility Monetary / non-monetary rewards
income of the present job (higheropportunity cost in changing job)
mobility
Specialization of skills mobility
Licensing requirements mobility
Higher age of workersmobility
-
8/10/2019 Factors of production.ppt
13/14
Factors affecting geographical
mobility of labour
Transport
Social factors
Economic conditions ( home country/other
countries) Political stability
Immigration or emigration restrictions
-
8/10/2019 Factors of production.ppt
14/14
Factor returns Rent
Interest
Wage
Profits