Changes to the Factors of Production (Cambridge (CIE) IGCSE Economics): Revision Note

This occurs when workers find it difficult to move from one geographical area to another in order to secure employment

Barriers to mobility may include family ties, lack of information about possible jobs in different parts of the country, and the challenges in securing/affording accommodation in an unknown location

This refers to the ability of a worker to change occupations when they lose a job

If their skill base is transferable between different occupations, then their occupational mobility is high

In reality, many workers are not able to easily transfer between occupations, and this is a particular issue when an economy is faced with structural unemployment

These can often improve the quality of the factors of production,
e.g. development of metal alloys

Changes in the costs of factors of production (for example, higher energy costs caused by the war in Ukraine) reduce the output of a nation as the input prices are now more expensive

Process innovation often results in productivity improvement, e.g. moving from labour intensive car production to automated car production

Over time, this increases the quality of labour in an economy

These can improve the quantity of the factors of production, e.g. deregulation of fracking (extracting oil from shale deposits) in the USA increased useable oil reserves

A positive net birth rate or positive net migration rate will increase the quantity of labour available

Preventing monopoly power results in more firms supplying goods and services in an economy and this increases the potential output of the economy