Factors of production

Sept 2005

Business Activity involves usingFactors 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 ideaLand=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?

Service Goods needed for Service

Car Wash

Nail Manicurist

Bus Company

Restaurant

Taxi Company

Some businesses use goods to provide a service

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'.

OPPORTUNITY COST

CONSUMERS:

e.g. Jeans or shoes?PUBLIC

SERVICES:

e.g. A Hospital or

a road?

BUSINESS:

e.g. A branch in Reading or Manchester?

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