Production & Productivity (Edexcel IGCSE Economics): Flashcards
Exam code: 4EC1
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Define factors of production.
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Cards in this collection (50)
Define factors of production.
The factors of production are the resources used by businesses to produce goods and services.
Define capital.
Capital includes any man-made resource used to produce goods and services, such as tools, buildings, machines and computer equipment.
Define land.
Land includes the natural resources and physical locations that are used for production.
Define labour.
Labour is the human input into the production process, involving mental or physical effort.
Define enterprise.
Enterprise involves taking risks when setting up or running a business, with the entrepreneur combining the factors of production to generate profit.
How many factors of production are there?
There are four factors of production: capital, enterprise, land and labour.
What determines the effectiveness of labour?
The effectiveness of labour is determined by the education, training and experience that workers have.
What is the factor income earned by land?
The factor income earned by land is rent.
What is the reward for enterprise?
The reward for enterprise is profit.
True or False?
The reward for capital is interest.
True.
The factor income earned by capital is interest.
True or False?
Producing a good or service usually requires only one factor of production.
False.
The production of any good or service requires a combination of all four factors of production.
The factor income earned by labour is .
The factor income earned by labour is wages.
Define the primary sector.
The primary sector is concerned with the extraction of raw materials from land, sea or air, such as farming, mining or fishing.
Define the secondary sector.
The secondary sector is concerned with the processing of raw materials and the manufacture of goods, such as oil refinement and vehicle production.
Define the tertiary sector.
The tertiary sector is concerned with the provision of services for consumers and other businesses, such as leisure, banking or hospitality.
Define the chain of production.
The chain of production is the series of steps taken to turn raw materials into a finished product that can be marketed and sold.
In which sector would a coal miner work?
A coal miner would work in the primary sector, as mining involves the extraction of raw materials.
Which sector links the primary and tertiary sectors in the chain of production?
The secondary sector links them, as it processes and manufactures the raw materials extracted by the primary sector.
On which sector is a less developed economy primarily focused?
A less developed economy is primarily focused on the primary sector, with most people employed in agriculture.
Why do successive sectors tend to generate higher profits?
Successive sectors tend to generate higher profits because each sector adds more value than the previous one.
Why do many firms relocate manufacturing to emerging economies?
Many firms relocate manufacturing to emerging economies to take advantage of the lower average wage rates there.
True or False?
The most developed economies have a very high proportion of the workforce employed in services.
True.
Developed economies fund advanced education and higher-level skills training, which supports the growth of service industries.
True or False?
As economies develop, employment shifts from the tertiary sector towards the primary sector.
False.
As economies develop, employment shifts away from the primary sector towards the secondary and then the tertiary sector.
In emerging economies, improved technology means that less is required in the primary sector.
In emerging economies, improved technology means that less labour is required in the primary sector, so more workers move into manufacturing.
The movement of firms from one sector of the economy to another is known as .
The movement of firms from one sector of the economy to another is known as sectoral change.
Define production.
Production refers to the volume of output produced using the factors of production.
Define productivity.
Productivity is the output per unit of input of a resource in a given time period, i.e. the rate at which output is produced.
Define investment in human capital.
Investment in human capital occurs when firms spend money on training their labour to improve efficiency and skill levels.
What is productivity used to measure?
Productivity is used to measure the efficiency of production methods.
Name two common measures of productivity.
Two common measures of productivity are labour productivity and capital productivity.
How can the productivity of land be improved?
The productivity of land can be improved by raising its quality, for example through greater use of fertiliser, drainage or irrigation.
How does process innovation affect productivity?
Process innovation often results in productivity improvements, such as moving from labour-intensive to automated car production.
How does an increase in productivity affect the production possibilities curve?
An increase in productivity causes an outward shift of the production possibilities curve, as more can be produced with existing factors.
True or False?
Production and productivity mean the same thing.
False.
Production is the total volume of output, whereas productivity is the output per unit of input in a given time period.
True or False?
Investment in the training of workers is likely to increase labour productivity.
True.
Training improves the quality of labour, increasing the speed at which output is produced.
A positive net migration rate of labour will increase the quality of labour available.
A positive net migration rate of skilled labour will increase the quality of labour available.
A fall in the quantity or quality of factors of production causes an shift of the production possibilities curve.
A fall in the quantity or quality of factors of production causes an inward shift of the production possibilities curve.
Define the division of labour.
The division of labour occurs when a task is broken up into several component tasks.
Define specialisation.
Specialisation occurs when workers focus on one or a few components of the production process and thereby gain significant skill in doing it.
Which economist developed the ideas of specialisation and the division of labour?
Adam Smith developed the ideas of specialisation and the division of labour, based on observations at a pin factory.
How does the division of labour affect productivity?
The division of labour raises output per worker, and so increases productivity.
At what levels can specialisation occur?
Specialisation can occur at the individual, business, regional and global levels.
How does the division of labour lower a firm's cost per unit?
Higher labour productivity from the division of labour lowers the cost per unit, making the firm's goods more price competitive.
Give one benefit of the division of labour for workers.
Workers can acquire the single skill required relatively quickly and gain recognition and status for performing it well.
How can the division of labour lead to structural unemployment?
If entire industries close because firms cannot compete with cheaper labour abroad, workers with a limited skill base face structural unemployment.
True or False?
The division of labour can make work repetitive and boring for workers.
True.
Repetitive work can lower motivation and productivity, and may lead to high staff turnover.
True or False?
The division of labour increases the time firms must spend training new workers.
False.
The division of labour reduces training time, because each worker only needs to learn a single, narrow task.
For firms, the increased output from the division of labour helps generate more sales and .
For firms, the increased output from the division of labour helps generate more sales and profit.
If a firm replaces labour with , a worker with a limited skill base may struggle to find employment elsewhere.
If a firm replaces labour with capital, a worker with a limited skill base may struggle to find employment elsewhere.
Bangladesh specialises in and exports them globally.
Bangladesh specialises in textiles and exports them globally.
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