9708 · 1.3
Factors of production — FAQ
Frequently asked questions for 9708 Factors of production. Direct answers first, then deeper explanation — then practise with marking.
Is money considered a factor of production?
No. In A-Level Economics, 'capital' refers to physical, man-made assets like machinery and buildings that are used in production. Money is 'financial capital' and is used to purchase these capital goods, but it is not productive in itself. It facilitates production but is not a direct input.
What is the difference between occupational and geographical mobility of a factor?
Occupational mobility refers to the ease with which a factor can switch between different uses or jobs (e.g., a farmer's field being used for housing, or an accountant becoming a teacher). Geographical mobility is the ease with which a factor can move from one location to another (e.g., a worker moving from London to Manchester for a job). Land is geographically immobile but can be occupationally mobile.
If an entrepreneur pays themselves a salary, is that profit?
No. If an entrepreneur pays themselves a fixed salary, that payment is considered a wage for their labour input (as a manager). It is a cost to the business. Their profit is the amount left over after all costs, including their own salary, have been deducted from the firm's revenue. Profit is the reward for risk-taking, not for their day-to-day labour.