1. Ch. 8 FACTORS OF PRODUCTION

2. P.151 Resources are used for production & are classified as:
human resources - labour and entrepreneurship
natural resources – land
man-made resources – capital
These resources are called the factors of production. Factors of production are the resources used in production.

3. Labour
Factors of
Production
Land
Capital
Entrepreneurship

4. P LABOUR
LABOUR
Mental and physical human effort used in production.

5. Labour
Labour is a factor of production that provides physical and mental human efforts in any production activity.

6. Labour quantity of labour labour productivity
(1) The size of the population
(1) Education and training
(2) Quantity and quality of capital and the use of new technology
(2) The proportion or % of the working population
(3) Method of organising labour / management
(3) Amount of Work = Number of working hour
(4) Better incentive scheme
(4) Better working environment

7. Labour supply and labour productivity
Labour is measured in terms of man-hours.
A man-hour is the amount of effort put by a worker in one hour.
Labour supply = number of workers x working hours of each worker

8. (1) The size of the population
Quantity of labour
(1) The size of the population
Birth rate, death rate, immigration and emigration affect the population size.
Generally speaking, a larger population will have a larger labour supply.

9. Quantity of labour
(2) The proportion of the working population
Two countries may have the same population size but different % of working populations.
An economy which has a larger proportion of working population has a larger labour supply.

10. Quantity of labour
(2) The proportion of the working population
The proportion of the working population is, in turn, affected by the composition (age & sex) of the population.

11. Figure 6.1 Age distribution of Hong Kong’s population
1995
1999
2000
Year
90%
100%
80%
70%
60%
50%
40%
30%
20%
10% 0%
Percentage
Age:
9.8%
10.9%
11.2%
over 65
70.8%
71.5%
71.6%
15-65
under 15
Source:
Hong Kong in Figures 2000
19.4%
17.6%
17.2%

12. Population pyramid 1961

13. Population pyramid 2001

14. Total population
Working population

15. (3) Amount of work = Number of working hour
Quantity of labour
(3) Amount of work = Number of working hour
The amount of work a worker does depend on how many hours each worker is willing to work, the working capacity of each worker and the incentive to work.

16. (3) Amount of work Quantity of labour
For instance, if the tax rate on income is very high, workers may supply less labour service. If the promotion prospects and working relationship with colleagues are good, workers are willing to work longer hours.

17. Hong Kong people work very long hours

18. P.154 Mastering econ data 8.1
Country A
Country B
Population size
8 million
10 million
% of working population
70%
60%
No. of working hours
46 hours
40 hours
Labor supply
257.6 million man-hours
240 million man-hours

19. Factors因素affecting影響the labour勞工quality
or productivity 生產力
The average labour productivity is the quantity of output produced per unit每單位of labour, for example, output per man-hour. (improve = more)
Average Product = Total Output or Total value of Output
Units of Labour (in man- hours)

20. Labour quality/productivity
(1) Education教育and training訓練
Educated workers are usually more open to new ideas and practices.
They are also more ready to learn new skills.
Workers who are trained are more skilful at their jobs.

21. Labour productivity
(1) Education and training
Technical education and on-the-job training improves workers’ technical know-how. Workers can produce more output.
訓練後
訓練前

22. (2) Quantity and quality of capital and the use of new technology
P.155 Labour productivity
(2) Quantity and quality of capital and the use of new technology
Workers can be more productive if there are sufficient machines and tools.
New technology can give an even greater output with the same input of labour.

23. (3) Method方式of organising labour / management管理
P.156 Labour productivity
(3) Method方式of organising labour / management管理
When a labour force is organized properly, they will have higher productivity.
Good management can enhance the efficiency of a labour force through better co-ordination and achieve an increase in productivity.

24. (4) Better incentive scheme
P.156 Labour productivity
(4) Better incentive scheme
Good promotion prospects and fringe benefits, such as medical insurance and a housing allowance, can increase the working incentive.
It will lead to improved job performance.

25. (4) Better working environment
P.156 Labour productivity
(4) Better working environment
A better working environment, with good lighting, ventilation and air-conditioning, etc., can also increase labour productivity.

26. P.156 Labour productivity
(4) Better working environment
Workers can work better in a clean and tidy working environment with air-conditioning and good lighting.

27. 1) Total working hours of firm A = ____________ = ______________
Number of
workers
employed
Number of
working hours
per worker
Units of
output
produced
Firm A
100
100 8 8
48,000
Firm B 90 10
49,500
1) Total working hours of firm A = ____________
= ______________
100 x 8 hours
800 man-hours

28. 2) The productivity of firm A is = _________________
Number of
workers
employed
Number of
working hours
per worker
Units of
output
produced
Firm A
100 8
48,000
Firm B 90 10
49,500
2) The productivity of firm A is
= _________________
= ____________________________
48,000 units
800 man-hours
60 units of output per man-hour

29. 3) Total working hours of firm B = _____________
Number of
workers
employed
Number of
working hours
per worker
Units of
output
produced
Firm A
100 8
48,000
Firm B 90 90 10 10
49,500
3) Total working hours of firm B = _____________
= ______________
90 x 10 hours
900 man-hours

30. 4) The productivity of firm B is = _________________
Number of
workers
employed
Number of
working hours
per worker
Units of
output
produced
Firm A
100 8
48,000
Firm B 90 10
49,500
4) The productivity of firm B is
= _________________
= ____________________________
49,500 units
900 man-hours
55 units of output per man-hour

31. Number of
workers
employed
Number of
working hours
per worker
Units of
output
produced
Firm A
100 8
48,000
Firm B 90 10
49,500
5) As a result, firm A has a higher average labour productivity than that of firm B.

32. 6) Labour productivity = Total output / Total number of man hours
workers
employed
Number of
working hours
per worker
Units of
output
produced
Firm A
100 8
48,000
Firm B 90 10
49,500
6) Labour productivity =
Total output / Total number of man hours
P.157 MED 8.2

33. P.158 Different types of wage payment systems
PPT Presentation