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Introduction to FOPs

Define Land? Anything supplied by nature used in the production of goods and services to create wealth.
State examples of Land? Physical land, seas, rivers.mineral wealth.
Define Labour? Any human effort used in the production of goods and services to create wealth.
State examples of Labour? Chef,nurse, plumber.
Define Capital? Anything man-made used in the production of goods and services to create wealth?
State examples of capital? Equipment, machinery, motor vehicles.
Define enterprise? Combines/organises the other factors of production, takes the initiative and risk in setting up a business.
Name the return/payment for each of the factors of production? Rent, wages, interest, profit, loss.
Define derived demand in relation to the factors of production? a factor of production that is demanded for its contribution to the production process.
Explain a specific factor of production? A factor is one that is so specialised that it doesn't have many different uses.
Explain an non-specific factor of production? A factor of production which can have many different uses.
Define occupational mobility of factors? The ease with which a factor of production can move from one occupation to another.
Define geographical mobility of factors? The ease with which a factor can move from one area to another.
Define marginal revenue productivity? Is the extra revenue earned when an additional unit of a factor is employed.
Define marginal physical output? Is the extra output produced when an additional unit of a factor of production is employed.
State the factors that influence MPP? Quality/Specialised nature of the factors, training/ education provided for the factors, expertise of the entrepreneur, law of the diminishing marginal returns.
State the factors that influence MRP? The productivity of the factor, the MR/selling price of the output, the law of demand.
Explain the relationship between MRP and MPP in perfect competition? MPP X P = MRP
Explain the relationship between MRP and MPP in imperfect competition and monopoly? MPP X MR = MRP
Define Supply Price? Is the minimum payment necessary to bring a factor into use and maintain it in that particular use.
Define transfer earnings? Is the earnings of a factor in the next best alternative employment.
Define economic rent? Refers to any earnings of a factor above its supply price.
Define quasi economic rent? Refers to economic rent of a temporary nature.
Outline the circumstances under which a FOP can earn economic rent? Shortage in the supply of any FOP, possession of a rare skill/talent, rent of ability, complelety specific FOP.
State contributions made by the neo-classical economist Alfred Marshall? Utility theory, quasi economic rent, power of competition, developed PED, consumer surplus and market time periods.
Created by: deborahh



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