The 4 Factors of Production
Land - Raw materials available from mining, fishing, agriculture Capital - A manufactured item used to aid production, such as machines, factories and computers Labour - Human workers who are involved in producing the good Enterprise - The individual or business who take the initiative to set up a business, and come up with new ideas / innovations.
Examples
Land
- Oil
- Coal
- Fish
- Fruit, vegetables, meat
- Real estate - Land to build factories
Labour
- Workers
- Management
Capital
- Machines
- Hammers, spades, drills
- Tractors
- Computers, phones
- Factories
- Public infrastructure - roads etc.
Changing the factors of production
You can increase the factors of production by either increasing the quality or quantity of one of the factors.
Changing a factor of production will have a long run effect.
Land
- Increase
- Discovery of new resources
- Decrease
- Depletion of non-renewable resources
Labour
- Increase
- Net immigration (more workers)
- Education and training (more skilled workers, able to work more efficiently)
- Decrease
- Net emigration (less workers)
- Less skilled workers
Capital
- Increase
- Investment into capital
- New technologies
- Decrease
- Reduction of investment into capital (machines will break, and need to be replaced)
Enterprise
- Increase
- Education and training (more educated people have better ideas)