Look at your phone for a second: Someone dug the metal out of the ground. Someone assembled it. It was built in a factory, on machines. And someone risked their money that you would buy it.
That is all four factors of production.
The four factors of production
Land — anything from nature
Not just ground: forests, fish, oil, rivers, sunlight. Earns rent.
Labour — human effort
Physical or mental. A surgeon and a bricklayer are both labour. Earns wages.
Capital — things made to make things
Machines, factories, tools, roads. Earns interest.
Entrepreneurship — the risk-taker
Combines the other three, and loses out if it fails. Earns profit.
Land → rent · Labour → wages · Capital → interest · Enterprise → profit
The exam calls these "resources": Resources = factors of production. The same four things, a different word.
Papers use resources, or sometimes inputs, where we say factors of production — usually as a 2-mark define. Either word means these same four things.
Money is not capital: Cash produces nothing.
The machine it buys is capital. Examiners set this trap constantly.
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Name something you'd stop wanting once you had it: Hard, isn't it. Get the phone, you want the better phone.
Wants keep going. Resources don't. That gap is called scarcity.
Scarcity is not poverty, and not a shortage: A shortage is temporary — the shop runs out, more comes Tuesday.
Scarcity never ends. Switzerland has it too. Every country runs out of doctors, land and hours.
What scarcity forces on us
- Choice — you can't have it all, so you pick.
- Opportunity cost — picking one means losing another.
- Three questions — what to make, how, and who gets it.
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Some resources grow back. Some don't.: That single difference decides whether today's choices leave anything for the people after us.
Renewable
- Grows back — fish, forests, wind, sun.
- Safe only if you take less than regrows.
- Overfish it and it behaves like a finite one.
Non-renewable
- Fixed stock — oil, coal, copper.
- Every barrel used is one the future loses.
- Gets scarcer over time, never less so.
Same sea, two futures: The sea grows 100,000 tonnes of fish a year.
Catch 80,000 and there are more fish next year than this year.
Catch 120,000 and there are fewer, every year, until there are almost none.
Same boats, same sea. The only difference is how much they take.
Sustainability, in one line: Meeting today's needs without stopping future generations meeting theirs.
This comes up as a 2-mark Define: The two words asked here are resources and entrepreneurship.
Two marks looks free. The first one is easy. The second is the one people miss.
2 marks
- What kind of thing it is — factors of production, or inputs.
- Plus one more element — what they are for, or an example.
- One or two sentences.
1 or 0
- Saying the word again: "resources are the resources used".
- Only half of it — the category with nothing that pins it down.
- Half a page, hoping.
The trap — saying the word again: "Entrepreneurship is when someone is an entrepreneur." Zero.
For entrepreneurship the second element has to be a function: a factor of production that organises the other three, or takes the risk, or starts the business.
A data-response text describes a country whose resources are stretched.
Define the term resources.
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