Factors of Production MCQ 1

Land as a Factor of Production

• Land is defined as natural resources used to produce goods and services, including oil, timber, gas, and water.
• Land is unique in economic theory, with all earnings from it being considered economic rent.
• The supply of land is fixed, making the supply curve vertical (perfectly inelastic).
• Land is a non-specific factor of production, meaning it has many uses.
• The supply of certain natural resources, such as fossil fuels, is finite.

Labour

• Labour refers to the human effort, both physical and mental, used in the production of goods and services in exchange for wages.
• Labour is enhanced by education and training, which increase an individual's productivity, leading to economic growth and development.
• Wages are influenced by factors such as skill level, experience, education, and industry demand.
• Labour supply depends on population size, demographic trends, and participation rates, as well as immigration, birth rates, and retirement age.

Labour Demand and Market

• Demand for labour is derived from the demand for goods and services and influenced by factors like technological advancements, consumer preferences, and economic conditions.
• The labour market is where labour services are bought and sold, involving interactions between employers (demand) and employees (supply), determining employment levels and wage rates.

Unemployment

• Unemployment occurs when the supply of labour exceeds demand.
• Types of unemployment include:
  • Cyclical unemployment (due to economic downturns)
  • Structural unemployment (due to changes in the economy)
  • Frictional unemployment (short-term transitions)

Labour Unions and Productivity

• Labour unions represent workers' interests, advocating for better wages, working conditions, and benefits, and play a significant role in labour negotiations and industrial relations.
• Labour productivity measures the output per worker or per hour worked, and high productivity is linked to higher wages and economic growth.
• Factors such as technology and worker efficiency can influence labour productivity.

Government Policies

• Governments influence the labour market through policies on education, minimum wage laws, labour rights, and social security.
• These policies aim to protect workers, reduce unemployment, and promote fair labour practices.

Learn about the characteristics of land as a factor of production, including its natural resources, supply curve, and economic rent.