Factors of Production
What Is Economics? Scarcity, Choice, and Economic Models
AO2
Syllabus requirement
Defines land, labour, capital, and entrepreneurship as the resources underlying all production and the basis for income distribution.
Assessment objectives
AO2 Application and Analysis
Summary
This topic explains the four factors of production — land, labour, capital and enterprise — which are the resources needed to produce goods and services, and the rewards paid to each factor (rent, wages and salaries, interest, profit). It also defines scarcity and distinguishes needs, wants, goods and services, showing why choices must be made about what, how and for whom to produce. Understanding these concepts is essential for analysing how resources are allocated in an economy.
