Lesson 1 OL Economics

Define enterprise (4 marks)

Answer explanation

Enterprise is the factor that takes the risk (1) in bringing other factors of production together in order to produce goods and services (1) to make profits (1). Enterprise involves the taking of decisions by entrepreneurs on what to produce and how to produce it (1).

Using examples, define the factor of production capital (4 marks)

Answer explanation

Capital can be defined as any human-made good (1) that is used to produce other goods and services (1). They are aids to production. (1) Examples of capital are factories, machinery, tools, and equipment. (1)

Describe the difference between labor and land (2 marks)

Answer explanation

Land is a natural resource (1), whereas labor is a human resource (1).

OR

The payment for land is rent (1), whereas the payment for labor is wages/salary (1).

OR

Most land is geographically immobile (1), whereas some labor is geographically mobile (1).

Describe the difference between labor and enterprise. (2 marks)

Answer explanation

Labor is human effort (1), whereas Enterprise is the ability to bear risks to organize factors of production (1).

OR

Labor is paid in wages (1), whereas Enterprise is paid in profit (1).

OR

Labor is tends to be less geographically and occupationally mobile (1) compared to enterprise (1).

Which statement about factors of production is correct?

• The fruit picked from the tree is called land.

• The managers of a company are called enterprise.

• The money used to finance a project is called capital.

• The owner of a company is called labor.

What is not a factor of production?

• a farm

• a farmer

• a farmer's bank account

• a second-hand tractor

An increase in the number of manufacturing robots in the car manufacturing industry represents an increase in the quantity of labor of which factor of production?

• capital

• enterprise

• labour

• land

Each of the factors of production earns an income. What are the incomes for capital and enterprise?

• Capital earns interest and enterprise earns profit

• Capital earns interest and enterprise earns wages

• Capital earns profit and enterprise earns interest

• Capital earns profit and enterprise earns rent

A business person employs two people to make sandwiches to sell in a cafe. As well as labour, which factors of production are involved in this activity?

• capital, enterprise and land

• capital and land only

• capital and enterprise only

• enterprise and land only

Economists refer to factors of production. Which is not a factor of production?

• The fields of a farm

• the machinery in a factory

• the shares of a company

• the staff in an office