Study Notes
Production in business economics involves understanding the factors of production and the sectors of the economy.
- Land — natural resources used by a business. Example: Coal, oil, and fertile soil.
- Labour — workforce in the economy. Example: Manual and skilled workers.
- Capital — artificial resources made by labour. Example: Factories and machinery.
- Enterprise — combines factors of production and takes risks. Example: Entrepreneurs starting a business.
- Primary Sector — extraction of natural resources. Example: Mining and agriculture.
- Secondary Sector — manufacturing goods. Example: Factories producing cars.
- Tertiary Sector — providing services. Example: Retail and banking.
Exam Tips
Key Definitions to Remember
- Land
- Labour
- Capital
- Enterprise
- Primary Sector
- Secondary Sector
- Tertiary Sector
Common Confusions
- Mixing up the roles of the primary, secondary, and tertiary sectors.
- Confusing capital with money instead of physical resources.
Typical Exam Questions
- What are the four factors of production? Land, labour, capital, and enterprise.
- How do the sectors of the economy differ? Primary involves extraction, secondary involves manufacturing, and tertiary involves services.
- Why might a business switch from labour-intensive to capital-intensive production? Due to advances in technology making capital more efficient.
What Examiners Usually Test
- Understanding of the factors of production.
- Differences between the sectors of the economy.
- Changes in sector importance in developed and developing countries.