Factors of production Sept 2005

Business Activity involves using Factors of Production FACTORS OF PRODUCTION are….. LAND = somewhere to work from. LABOUR = people to work in the business. CAPITAL = money to cover the business’ needs. ENTERPRISE = ideas.

Train Company Factors of Production LAND LABOUR doing the job CAPITAL used in the form.. ENTERPRISE the idea Land=Garage, or mobile so you can go to offices Labour=A number of people with their own vans, people working part time or only at busy times Capital=Bank loan to get a van. Ask friends or family Enterprise=Go to other people rather than them come to you

Your business…Car washing Working in pairs and thinking of the FACTORS OF PRODUCTION. Write in your exercise books all the resources your company would require to provide the service below! Be imaginative!!!! 10 mins Also, write down how you would decide whether your business has been a success?

Car Wash Factors of Production? LAND LABOUR CAPITAL ENTERPRISE

Business Success? How do you know if your car washing business is successful?

Link between Goods & Service? Some businesses use goods to provide a service Service Goods needed for Service Car Wash Nail Manicurist Bus Company Restaurant Taxi Company

Opportunity Cost…The need to choose Businesses have to balance their FACTORS OF PRODUCTION to make choices; they can’t do everything they want to do. All choices involve giving up something. OR… OR… OR… Consumers Private businesses Public Services

Opportunity Cost…The need to choose Business are continuously having to balance their resources, and will not be able to do everything they want to do. The benefit lost as a result of this choice is called the OPPORTUNITY COST For example… A cinema chain might want to open a cinema in Manchester and Reading, but cannot because it cannot afford to do so and decides to open one in Reading only. The loss of the Manchester site is called the OPPORTUNITY COST.

Opportunity Cost - Definition Opportunity Cost = ‘measures cost in terms of the next best or highest valued alternative that was forgone'. CONSUMERS: e.g. Jeans or shoes? PUBLIC SERVICES: e.g. A Hospital or a road? BUSINESS: e.g. A branch in Reading or Manchester? OPPORTUNITY COST

Business Decisions Businesses have to make choices based on decisions, for example where to build a cinema, where to locate a bank branch. Business decisions balance goods companies make or services they provide. i.e their production and the goods and services they use i.e. their consumption