Bsc agri 2 pae u-2.2 factors of production

Bsc agri 2 pae u-2.2 factors of production

• 1.
  FACTORS OF PRODUCTION BSCAGRI 2 PAE UNIT 2
• 2.
  Factors of production •Resources used for production • Types: – Land – Capital – Labour – Entreprenuership
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  Land • Natural resources •Characteristics – A gift of nature – Limited in supply – Land is immovable – The supply of land involves no opportunity cost
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  Capital • Man-made resourcesused for further production • Examples: machines, raw materials, tools • Features: – Man made – It raises the productivity of other factors
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  Land or Capital? •Ice at Mount Everest • Ice in a skiing field • Sea water • Sea water in a seafood restaurant • Sharks in the Atlantic Ocean • Sharks at the Ocean Park
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  Human Resources • Labour •Entreprenuership
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  Labour Supply • Measuredin terms of time (man hour) • Labour supply = no. of workers x no. of working hours per worker
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  Labour Supply • Measuredin terms of time (man hour) • Labour supply = no. of workers x no. of working hours per worker • Factors affecting labour supply: – Size of population – Size of working population – No. of working hours
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  How to increaselabour supply? –  population growth (by natural growth or immigration) –  monetary rewards –  import of labour from other countries –  retirement age (e.g. from 60 to 70) –  school leaving age (e.g. from 16 to 17)
• 10.
  Labour productivity • Measuredin terms of output per unit of labour Average labour productivity = average output per man hour June 2005 Firm A Firm B Number of working hours per worker 240 180 Units of output 7200 6400 Average labour productivity 30 35.6 Firm B has a higher labour productivity than firm A
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  How to raiselabour productivity? • Better education and training • Other factors of production( quantity & quality) • Better management or organization. e.g. division of labour • Better working conditions • Greater fringe benefits (housing allowances,medical care,bonus, meal..)
• 12.
  Mobility of Labour •Geographical mobility: the ease at which labour can move from one working place to another. • Occupational mobility: the ease at which labour can change from one type of job to another
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  Factors affecting occupationalmobility • Monetary / non-monetary rewards •  income of the present job (higher opportunity cost in changing job) mobility  • Specialization of skills   mobility  • Licensing requirements   mobility  • Higher age of workers  mobility 
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  Factors affecting geographicalmobility of labour • Transport • Social factors • Economic conditions ( home country/other countries) • Political stability • Immigration or emigration restrictions
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  Factor returns • Rent •Interest • Wage • Profits
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  Source • 1. Elementaryeconomic theory - K.K. Dewett and J.D. Verma • 2. International Economics - B. Mishra • 3. Fundamentals of Agricultural Economics - A.N. Sadhu and A. Singh • 4. Economics - Paul A. Samelson and W.D. Nordhans (Pearson Publications) • dept.mst.edu.hk/economics/Factors%20of%2 0production.ppt