![]() Production based on capital is called ‘capital intensive’ production, in contrast to ‘labour intensive’ production. The more a factor can be substituted the less it can exploit its relative scarcity. Factors can be substituted when possible, and this affects the relative reward. ![]() In basic economic theory, the more scarce and essential the factor the greater the reward. ALL resources can be classified as one of the following. Factor incomes are: rent, wages, interest and profit. The Four Factors of Production Producing goods and services requires the use of resources- DUH. When factors are used they earn a reward called a factor ‘income’. Land, labor, capital and entrepreneurship are the four categories of factors of production. The role of the entrepreneur is to combine the other factors in the most efficient way. Factors of production are resources a company uses to generate a profit by producing goods and services. Modern economists also refer to the environment as a fifth factor of production.įactors are traded in factor markets, including the labour market, the capital market and the market for commercial property. There are four basic factors, including land and natural resources, labour, capital and enterprise. On his video, he pointed out 5 factors that impacts supply: 1) Price of related product 2) Number of suppliers 3) Price Expectation 4) Technology 5) Price of inputs In this guide there are only 4 points listed where two of them are different to those he listed in the video: 1) Natural conditions 2) Input of price 3) Technology 4) Gov. ![]() Factors are the basic ‘building blocks’ of economic activity. Factors of production are the resource inputs needed by producers in order to create an output of goods and services. Factors of production are resources a company uses to generate a profit by producing goods and services.
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