Topic One (4.1): Firms and Production
In this topic you will study the following:
- Factors of production.
- Labour- and capital-intensive production.
- Production and productivity.
Reading
For this topic you will need to work through pages 100 to 105 in your course book.
Key Points
- Please pay attention to what makes up the four factors of production, which are the inputs used by businesses to produce goods and services sold to consumers.
- You will need to understand the concept of derived demand for these factors, as well as the different way that they can be combined.
- In addition, you will learn that there is normally a choice between production mainly using people (labour intensive) and mainly using machines (capital intensive) as machines are normally referred to as capital goods.
- Finally, you will also learn what production means and how efficiency can be judged in terms of different measurements of productivity.