Factors of production Resources used for production Types: Land Capital Labour Entreprenuership

Land Natural resources Characteristics A gift of nature Limited in supply Land is immovable The supply of land involves no opportunity cost

Capital Man-made resources used for further production Examples: machines, raw materials, tools Features: Man made It raises the productivity of other factors

Land or Capital? Ice at Mount Everest Ice in a skiing field Sea water Sea water in a seafood restaurant Sharks in the Atlantic Ocean Sharks at the Ocean Park

Human Resources Labour Entreprenuership

Labour Supply Measured in terms of time (man hour) Labour supply = no. of workers x no. of working hours per worker

Labour Supply Measured in terms of time (man hour) Labour supply = no. of workers x no. of working hours per worker Factors affecting labour supply: Size of population Size of working population No. of working hours

How to increase labour supply?  population growth (by natural growth or immigration)  monetary rewards  import of labour from other countries  retirement age (e.g. from 60 to 70)  school leaving age (e.g. from 16 to 17)

Labour productivity Measured in terms of output per unit of labour

How to raise labour productivity? Better education and training Other factors of production( quantity & quality) Better management or organization. e.g. division of labour Better working conditions Greater fringe benefits (housing allowances,medical care,bonus, meal..)

Mobility of Labour Geographical mobility: the ease at which labour can move from one working place to another. Occupational mobility: the ease at which labour can change from one type of job to another

Factors affecting occupational mobility Monetary / non-monetary rewards  income of the present job (higher opportunity cost in changing job) mobility  Specialization of skills   mobility  Licensing requirements   mobility  Higher age of workers  mobility 

Factors affecting geographical mobility of labour Transport Social factors Economic conditions ( home country/other countries) Political stability Immigration or emigration restrictions

Factor returns Rent Interest Wage Profits