1. The Factors of Production
SR LR Productivity

2. The 4 factors of production enterprise/entrepreneurship, labour, land, capital trees, timber, fish, fresh water, sole trader, component parts, cleaning fluid, gutted fish, shareholders funds, partners.
Factor
Description
examples
This is any natural resource that is extracted from the earth. In it’s unprocessed state it is the product of primary industries
This is the contribution made by hired workers or staff. Each staff member can be measured for his/her productivity
This is a person made or processed resource which is more easily used by business to make finished goods. Can also refer to finance.
This is the risk taker that starts the business venture off and accepts potential profit or loss from their involvement

3. The 4 factors of production enterprise/entrepreneurship, labour, land, capital trees, timber, fish, fresh water, sole trader, component parts, cleaning fluid, gutted fish, shareholders funds, partners.
Factor
Description
examples
This is any natural resource that is extracted from the earth. In it’s unprocessed state it is the product of primary industries
This is the contribution made by hired workers or staff. Each staff member can be measured for his/her productivity
This is a person made or processed resource which is more easily used by business to make finished goods. Can also refer to finance.
This is the risk taker that starts the business venture off and accepts potential profit or loss from their involvement

4. In the short run (SR) at least one factor is fixed – usually land capital and/or entrepreneurship
What is happening to the productivity of this firm? Graph and conclude.

5. Add the following labels to your graph
TP, AP, MP Benefits of specialisation and division of labour Increasing marginal productivity Diminishing average returns Diminishing marginal returns Negative marginal product

6. Diminishing marginal productivity or diminishing factor returns
Why do these occur?
Space and crowding can hinder productivity because…
Specialisation is complete so…
Equipment may be scarce and therefore…
The entrepreneur is less able to effectively direct staff so…

7. True or false
A rise in productivity is always as a result of adding more of a factor
When MP is greater than AP the average is rising
When MP is less than AP the average is falling
Average productivity is likely to be negative at some point
When mp = ap the average is constant

8. Long run production
In the long run (LR) it is likely that all factors are variable.
The LRAC is often L shaped because economies of scale are limited in each firm and diseconomies of scale can be managed/avoided.

9. What is happening here?

10. Effective factor markets need factor mobility
What does this mean? Why is it important? What might lead to factor immobility? Land Labour Capital Enterprise What would be the impact on the market for that factor? Think market failure xs D&S