High School
First Year
First Year
Production Factors and Their Combinations
Financial Economics
Definition
Fixed/Circulating Factor
Fixed = not destroyed during the production process; reused over several years (oven, premises) Circulating = destroyed during the process; intermediate consumption (raw material, energy)
Production Factor
-Labor -Capital -Natural Resources
Complementary/Substitutable Factor
Complementary = when production requires dependence between labor and capital (e.g., bus driver) Substitutable = when it is possible to replace one factor with another, replacing labor with capital (e.g., self-checkout)
Primary/Secondary Factor
Primary factor = those not arising from economic activity, namely labor (e.g., land, wind) Secondary factor = directly arising from economic activity, it is capital (e.g., intermediate consumption)
Productivity Gains
Increases in productivity, improvements in the efficiency of production factors; increase in production with the same amount of resources Maintaining production with fewer factors
Productivity Gains
Key Points:
- The primary and secondary production factors.
- Human capital.
- The substitution or complementarity of production factors in the production function.
- The role of investment in the accumulation of factors.
- The overall productivity of factors and productivity gains.
High School
First Year
First Year
Production Factors and Their Combinations
Financial Economics
Definition
Fixed/Circulating Factor
Fixed = not destroyed during the production process; reused over several years (oven, premises) Circulating = destroyed during the process; intermediate consumption (raw material, energy)
Production Factor
-Labor -Capital -Natural Resources
Complementary/Substitutable Factor
Complementary = when production requires dependence between labor and capital (e.g., bus driver) Substitutable = when it is possible to replace one factor with another, replacing labor with capital (e.g., self-checkout)
Primary/Secondary Factor
Primary factor = those not arising from economic activity, namely labor (e.g., land, wind) Secondary factor = directly arising from economic activity, it is capital (e.g., intermediate consumption)
Productivity Gains
Increases in productivity, improvements in the efficiency of production factors; increase in production with the same amount of resources Maintaining production with fewer factors
Productivity Gains
Key Points:
- The primary and secondary production factors.
- Human capital.
- The substitution or complementarity of production factors in the production function.
- The role of investment in the accumulation of factors.
- The overall productivity of factors and productivity gains.