Cambridge IGCSE and O Level Economics
Chapter 2: Factors of production
Suggested answers to individual and group activities
Group activities
1 a consumer good
b a consumer or capital good depending on who uses it
c a consumer good
d a capital good
e a capital good
f
a capital good
2 For example: photocopiers, computers, desks, filing cabinets.
3 aThe facilities students use both at home and in schools and universities have been improved
by advances in technology. They have more access to information and more tools via the
internet. They can also keep in contact with fellow students and teachers through social
media. Their teachers may also make use of, for example, interactive white boards.
b Advances in technology have improved medical equipment, helped to develop new
medication and enabled more complex operations to be carried out. For example, laser
surgery is now undertaken to improve some people’s eyesight and there are multiple organ
transplants.
c Food production has increased as a result of more advanced machinery and improved crops.
For example, some farmers are now using viners, which are special harvesting machines that
suck up peas and remove them from their pods. Crops are being developed that are more
resistant to diseases and have a higher nutritional content.
4 a iSuchi Mukherjie. Cambridge University (Economics and Maths); London School of
Economics (Finance and Economics).
ii Lui Chuanzhi. Xidian University (Engineering).
iii Ben Murray-Bruce. University of South Carolina (Marketing).
iv Zafar Khan. California Institute of Technology (Electronical and Electronics Engineering).
b For example: Richard Branson (Virgin).
Individual activities
1 Among the forms of land used by a paper mill, are the land on which the mill is built and the
water and wood used in the process of making paper.
2 a capital
b capital
c land – if it is a naturally formed lake but capital, if it is man-made
d labour
e enterprise
3 a and b would raise labour productivity. Improved education and training would make workers
more skilful and hence capable of producing a higher output. Better equipment should also
enable each worker to produce more. On the other hand, c would probably cause a fall in output
per worker. Worse working conditions would reduce workers’ motivation and may make it more
difficult for them to carry out their tasks.
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Cambridge IGCSE and O Level Economics
4 aIt will need 16 machines in total. It starts with 9 machines at the beginning of the next year
(12 − 3) so it needs to buy 7 machines: 3 for replacement and 4 to expand capacity.
b There may be advances in the technology.
Suggested answers to multiple choice questions and
four-part question
Multiple choice questions
1 B
Enterprise is the ability and willingness to bear uncertain risks and make production decisions.
2 A
Capital is a human made good used to produce other goods and services. A road enables
passengers to travel and freight to be transported.
3 B
Net investment is gross investment minus depreciation. In this case, it is 3 000 − 500.
4 B
Enterprise, and the entrepreneurs that provide it, find it relatively easy to switch from one
industry to another and from one location to another.
Four-part question
a Land and capital.
b An increase in the retirement age would increase the quantity of labour. More people would
be in the labour force if they have to work to, for example, up to the age of 70 rather than 65 is
disfigured. The working age range would be expanded.
There might also be an increase in the number of people within the existing working age group.
This could be because of a rise in the birth rate that occurred 16 or more years earlier, more
people of working age coming to live in the country than working age people leaving to live in
other countries or a fall in the death rate.
c The occupational mobility of labour may increase over time due to better education, appropriate
training and the provision of information about job vacancies. If workers are better educated, they
will gain more qualifications and skills. This will enable them to apply for a greater range of jobs
and will make them more attractive to employers. Unemployed agricultural workers, for example,
could be trained in the skills needed to work in the tourism industry if there are vacancies in the
tourism industry, enabling labour to move from a declining to an expanding industry.
Providing information about job vacancies can make workers aware of job opportunities more
suited to their skills and offering them better pay and working conditions. This may encourage
workers to move from one occupation to another occupation.
© Cambridge University Press 2018
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