Reference no: EM133099437

Why Are Factors of Production Important in Economics?

Economics embodies the concepts, theories and applications regarding individual and big-picture production, consumption and transfer of wealth. Since Adam Smith's seminal "The Wealth of Nations" was published in 1776, essentially creating the concept of modern economics, "factors of production" have been divvied into four means of creating goods or services to generate an economic profit. As time moves on and technology shifts how we live and work, the importance of the factors of production evolve and adapt to modern society.

Besides these four factors of production, some believe the factors have begun to expand as a result of parameters including governance, trade barriers, technology and more. But, at their heart, each factor of production remains relevant to how the economy stays strong or why it falters. These factors are land, labor, capital and entrepreneurship. As the 21st century moves ahead, there are aspects of modern society that people like Adam Smith, the godfather of economics, could never have foreseen. The use of robots in factories, for instance, and self-driving cars in transport will not only change efficiencies in production, but they will also put people out of work. So economists now are studying ways in which society can balance technological advances while ensuring the populace still has money with which to live and spend. Ideally, the economy does not merely drive economic wealth it must drive the distribution of wealth too.

Adapted from source: https://bizfluent.com/info-8502269-factors-production-important-economics.html

QUESTION ONE

1. Select an organisation of your choice or use the organisation you are currently employed at, analyse FOUR (4) factors of production of the organisation and evaluate the success of these factors in the current economy. Provide examples on
how to improve each of the factors you have evaluated.

2. Apply steps in the control process to ANY relevant department that is responsible for the control of ONE (1) factor of production, E.g. Capital (finance department), Show how each step can be used in the standard operating procedures relevant to the department. Comment on the overall success of the control process used.