Factors of Production

The creation of factories

Factors of production
n  Resources used for production
n  Types:
n  Land
n  Capital
n  Labour
n  Entreprenuership
Land
n  Natural resources
n  Characteristics
n  A gift of nature
n  Limited in supply
n  Land is immovable
n  The supply of land involves no opportunity
cost
Capital
n  Man-made resources used for further
production
n  Examples: machines, raw materials, tools
n  Features:
n  Man made

n  It raises the productivity of other factors

Land or Capital?
n  Ice at Mount Everest
n  Ice in a skiing field
n  Sea water
n  Sea water in a seafood restaurant
n  Sharks in the Atlantic Ocean
n  Sharks at the Ocean Park
Human Resources

n  Labour

n  Entreprenuership
Labour Supply
n  Measured in terms of time (man hour)
n  Labour supply = no. of workers x no. of
working hours per worker

The Labour
n 
Supply Curve
Labour Supply
n  Measured in terms of time (man hour)

n  Labour supply = no. of workers x no. of working

hours per worker

n  Factors affecting labour supply:

n  Size of population
n  Size of working population
n  No. of working hours
Before factories?
n  Self sufficient population
n  79% English population lived in rural or
agrarian society
Advent of factories…
n  Creation of large cities
n  Specialization
n  Trade
n Large cities
took time to
develop
New sweater, before factories?
n  Merchant
n  Travels around looking for extra sweaters to
sell
n  Labour intensive,
unique and not very resource
efficient nor labour efficient
Terms
n  Labour intensive: a lot of time to produce
something that could be produced in a less
time consuming and more efficient method
n  Resource efficient: being able to manage
your resources (4 factors) to maximise
production of your good => product
maximisation
n  Labour efficient: maximising the output of
production of labour => product
maximisation
Along came the entrepreneur…

+ =
What are we lacking?
1.  Land
2.  Labour
3.  Entrepreneurship
4.  ?
Capital
n  The last and most important item
n  Man made products

n  Before we look at capital though…

 Supply & Demand
n  More is less
n  Shortage

So how do you
overcome this
shortage?
You use capital!
n  The creation of man-made objects to
improve or make your production more
efficient.

SR Type Tray Sealing

Machine (commonly found
in supermarkets)
Where to put the factory?
n  Easy to gather all factors of production
n  Access to energy to run the capital
n  Water and steam
n  Labour
n  Land (access to raw materials)
 Map p614
n  What does it show us about how England
developed?
n  Where is most of the energy?
n  What are most of the cities located near? Why?
n  Why are ports, railroads and canals important to
the creation of the factory and the development of
the city?
n  Do you notice some areas are far emptier of
cities, such as North Scotland and Wales. Why
might that be the case?
Your task (formative)
n  Look up many of the inventions that
improved the production of goods in the
Industrial Revolution.
n  Pp614-619 & pp652 – 655
n  How did the inventions change (improve)
the production process?
How to increase labour supply?
n  é population growth (by natural growth or
immigration)
n  é monetary rewards
n  é import of labour from other countries
n  é retirement age (e.g. from 60 to 70)
n  ê school leaving age (e.g. from 16 to 17)
Labour productivity
n  Measured in terms of output per unit of
labour