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Factors
of production
Yvonne
Harvey, Contributor
Hello
again. It's a new year and I do hope
it has begun well for you and that
as far as studying is concerned, you
will do your best. As you can see,
we are shifting our focus to a new
section of the syllabus - Section
5: PRODUCTION. This week's lesson
will bring in the following specific
objectives:
1.
The candidate should be able to identify
factors in the production of goods
and services.
2.
The candidate should be able to identify
industries developed from the natural
resources of Caribbean territories.
Before
we go into identifying the factors
of production of goods and services,
it would be good for us to put the
topic into an appropriate context
by defining the terms,' production'
and 'factors of production'.
Production
refers to the creation of goods and
services to satisfy people's needs
and wants. Needs are things that are
essential to human survival. There
are three (3) primary needs: food,
clothing, and shelter. Wants are things
not necessary to survival. These things
help to make the quality of life better:
for example furniture and appliances.
Production can also be defined as
the putting together of direct and
indirect services that gives utility
or satisfaction to consumers.
Agents
of production
Factors
of production refer to inputs into
production, agents of production or
productive resources used to make
the things people want to consume.
There
are FOUR factors of production: land,
labour, capital and entrepreneur.
Each factor receives a payment or
reward for its use in production.
Land earns rent, labour earns wages
or salaries, capital earns interest
and/or dividends and the entrepreneur
earns profit. Early economists recognised
only THREE factors of production:
land, labour and capital. Labour was
in this instance split into two parts
i.e. mental and physical ability and
specialised labour (entrepreneurship
or enterprise).
Factors
of production can be classified or
grouped under THREE main headings:
| NATURAL |
HUMAN
|
MAN-MADE |
| Land |
Labour |
Entrepreneur
capital |
We
will now proceed to define each of
the factors of production. Land refers
to all natural resources, a gift of
nature. As such, land not only includes
land itself, but natural resources
found in the earth and sea. Examples
are geographical surface area rivers,
lakes, seas, mineral deposits and
chemical deposits.
Labour
as a factor of production is man's
physical and mental contribution to
creation of goods and services. Some
labour is more physical than mental,
for example labour on a construction
site, and some labour is more mental
than physical, for example the labour
provided by the accountant.
Capital
as a factor of production does not
include money, but refers to all the
assets which are directly employed
in the business and which are not
wanted for their own sake, but for
their contribution to the production
process. As such, capital here includes
factory buildings, machinery, equipment,
stock raw materials and partly finished
goods.
Risk
bearer
The
entrepreneur is the organiser and
risk bearer in production. The entrepreneur
organises the other factors of production
and bears risks, some of which can
be insured against (insurable risks)
and some of which cannot be insured
against (uninsurable risks/uncertainties)
for example, a sudden fall in the
demand for a good or service.
Having
defined each factor of production,
we will now go back to land and consider
its purpose and then look at the natural
resources of the Caribbean and the
industries based on these resources.
The
main purpose of land is that it serves
as a site where production takes place.
Also, the amount of land is one of
the indicators of wealth and economic
development of a country. Land provides
the raw materials for production.
Production CANNOT take place without
land. Primary, secondary, and tertiary
production and all economic activity
involve the use of land.
The
table below indicates many of the
natural resources of the Caribbean,
the countries where these resources
are found and the use to which these
resources are put.
| NATURAL
RESOURCES |
COUNTRY
OF ORIGIN |
RELATED
INDUSTRY |
| Asphalt |
Trinidad
and Tobago (T&T) |
Road
construction |
| Bauxite |
Jamaica,
Guyana |
Export
in aluminium manufacturing |
| Crude
oil |
T&T,
Barbados |
Petroleum
products |
| Diamonds |
Guyana |
Jewellery |
| Forestry |
Guyana |
Lumber |
| Gypsum |
Jamaica,
Guyana |
Construction |
| Manganese |
Guyana |
For
export |
| Natural
gas |
T&T |
Electricity |
| Silica
and Sand |
Jamaica |
Construction |
| Limestone |
Jamaica,
Guyana, T&T |
Cement,
Iron and Steel |
| Sun |
Throughout
the Caribbean |
Solar
energy and tourism |
Now
for your homework:
(a)
What is meant by the term 'production?
(2 marks)
(b)
Define the term 'factors of production.'
(2 marks)
(c)
Briefly describe the FOUR factors
of production. (4 marks)
(d)
(i) Name FOUR major natural resources
of the Caribbean and state one country
in which
each
is found. (8 marks)
(ii)
For each natural resources named in
(d) (i) State one use to which the
resource is put. (4 marks)
TOTAL
MARKS: 20
Next
week we will consider some other aspects
of production. See you then.
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Shernette
Reid presents Tracy-Gaye Peart,
of Mount Alvernia High School,
with a cheque.
-
photo by Denise Reid
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Yvonne
Harvey teaches at Glenmuir High School.
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