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.

Read Icon.png Reading

For this topic you will need to work through pages 100 to 105 in your course book.

Interact Icon.png 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.