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Factors of production Sept 2005.

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Presentation on theme: "Factors of production Sept 2005."— Presentation transcript:

1 Factors of production Sept 2005

2 Business Activity involves using Factors of Production
FACTORS OF PRODUCTION are….. LAND = somewhere to work from. LABOUR = people to work in the business. CAPITAL = money to cover the business’ needs. ENTERPRISE = ideas.

3 Train Company Factors of Production
LAND LABOUR doing the job CAPITAL used in the form.. ENTERPRISE the idea Land=Garage, or mobile so you can go to offices Labour=A number of people with their own vans, people working part time or only at busy times Capital=Bank loan to get a van. Ask friends or family Enterprise=Go to other people rather than them come to you

4 Your business…Car washing
Working in pairs and thinking of the FACTORS OF PRODUCTION. Write in your exercise books all the resources your company would require to provide the service below! Be imaginative!!!! 10 mins Also, write down how you would decide whether your business has been a success?

5 Car Wash Factors of Production?

6 Business Success? How do you know if your car washing business is successful?

7 Link between Goods & Service?
Some businesses use goods to provide a service Service Goods needed for Service Car Wash Nail Manicurist Bus Company Restaurant Taxi Company

8 Opportunity Cost…The need to choose
Businesses have to balance their FACTORS OF PRODUCTION to make choices; they can’t do everything they want to do. All choices involve giving up something. OR… OR… OR… Consumers Private businesses Public Services

9 Opportunity Cost…The need to choose
Business are continuously having to balance their resources, and will not be able to do everything they want to do. The benefit lost as a result of this choice is called the OPPORTUNITY COST For example… A cinema chain might want to open a cinema in Manchester and Reading, but cannot because it cannot afford to do so and decides to open one in Reading only. The loss of the Manchester site is called the OPPORTUNITY COST.

10 Opportunity Cost - Definition
Opportunity Cost = ‘measures cost in terms of the next best or highest valued alternative that was forgone'. CONSUMERS: e.g. Jeans or shoes? PUBLIC SERVICES: e.g. A Hospital or a road? BUSINESS: e.g. A branch in Reading or Manchester? OPPORTUNITY COST

11 Business Decisions Businesses have to make choices based on decisions, for example where to build a cinema, where to locate a bank branch. Business decisions balance goods companies make or services they provide. i.e their production and the goods and services they use i.e. their consumption

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