Factor of Production Capital & Enterprise

Factor of Production Capital & Enterprise

by Michaela Graham-Wells

​Review

There are 4 Factors of Productions which are :

Land

Labour

Capital

Enterprise/ Entrepreneurship

​

​Land Refers to all gifts from nature or natural resources.

​Objectives

​Students will be able to:

​1. Recall the definition of Capital and Enterprise

​2. Differentiate between working capital and fixed capital

3. Describe three duties of an entrepreneur

Capital

​Capital (manufactured resources) as a factor of production is the money that is invested in a business in order to acquire the assets which the business needs to trade or produce.

​Examples of Capital

​Capital includes the money and all other assets that are employed in the process of production. Capital includes the building, machinery, equipment, stocks any other producer goods used in making items we consumer (Consumer goods).

Multiple Choice

What is capital?

• Human Resources

• Natural Resource

• Manufactured resources

• Enterprise

Multiple Choice

True or False. Capital includes the money invested in the business for assets

• True

• False

Multiple Choice

True or False. Capital is money invested for the purchase of assets.

• True

• False

​Forms of Capital

​There are two forms of capital

1. Fixed Capital

2. ​Working Capital

​

​Fixed Capital

​Fixed capital is the items such as buildings, machinery and other equipment with a long life which are used many times over in the production of goods and creation of further wealth.

​

​Working Capital

​ Working Capital is the firm’s short term assets which are turned over fairly quickly in the course of the business. They include cash, bank balances, stock of raw materials, etc.

​

​Calculate Working Capital

Multiple Choice

True or false. Fixed capital are constantly changing

• True

• False

Multiple Choice

Working Capital are short term assets.

• True

• False

Multiple Choice

Examples of Fixed Capital are

• Cash,

  inventory,

  raw materials

• Building,

  equipment,

  machinery

• Machinery,

  cash,

  inventory

• Equipment,

  raw materials,

  cash

​Enterprise

​Enterprise refers to Entrepreneurship. It includes the people (entrepreneurs) that own the business who takes the risks and makes decisions to enable the production to be carried out in anticipation of demand.

​Duties of an Entrepreneur

​In order to participate in entrepreneurship the entrepreneur must be will to do the following:

 

1.      Raise Capital

2.      Organize various levels of Labour

3.      Define and clarify business policy for all levels of personnel

4.      Make necessary changes in the interest of growth

Multiple Choice

Another name for enterprise is human resources

• True

• False

Multiple Choice

Three duties of an entrepreneur are Raise capital, organize labour, define policies.

• True

• False