Factors of production: 

1. Land: natural resources available for production, e.g. oil, coal, forests, fish, farming. 
2. Labour: human effort available for production/human capital, e.g. skilled/unskilled. 
3. Capital: man-made physical goods used in production, e.g. machines, tools, factories (Do NOT accept money). 
4. Enterprise: the role of the entrepreneur in terms of organising the other factors of production and in taking a risk in doing so. 

Examples for each factor must be given to fetch full marks.

Build a two sided discussion and consider the pros and cons of using natural resources. You answer could include:

if Conservation of natural resources is done:

• this will avoid too rapid a depletion of resources
• this is more sustainable as it takes into account the needs of future generations
• a better long-term strategy

On the other hand use of natural resources:

• will raise output
• will raise income and employment
• but resources will be depleted/exhausted more quickly
• more of a short-term strategy

A one-sided answer, which focuses on the conservation or use of resources only, can gain no more than 5 marks.

Explanation should include the definition of LAND and examples

It refers to all those natural resources used in production.

Examples could include: Coal, oil, gold, fish, forests and the land itself 

The answer must include the following concept explanation 

• scarcity due to limited resources  and unlimited wants of consumers 
• this leads to choices being made and opportunity cost when a choice is
• Therefore, proper decision must be made to utilise the resources in the optimal manner in terms of what to produce, how to produce and for whom to produce 

The answer must include the following:

Definition of opportunity cost: the (next) best alternative foregone as a result of making a decision 

Diagram of production possibility curve – axes correctly labelled and curve correct shape (bowed out or straight downward sloping)

Explanation – idea of moving along one axis has the effect of a reverse movement along the other axis 

Definition and explanation

PED is the percentage change in the quantity demanded of a product divided by the percentage change in its price

Or 

PED is the responsiveness of demand to a change in price. 

Its value can range from perfectly inelastic to perfectly elastic. inelastic demand has a value of less than 1 while elastic demand has a value of more than 1 and it is usually a minus figure varies along the demand curve.

A brief explanation is required to get full marks.

• there will be elements of a market economy where equilibrium price and quantity are determined  by  forces  of  demand  and  supply  without  the  need  for  government intervention
• changes in demand and supply bring about changes in price and quantity 
• the allocation of resources is, therefore, determined by the profit motive 
• bringing together the preferences of the producers and the consumers 
• there will also be elements of government intervention either through direct government control and ownership or through influences on the private sector, such as through laws and regulations

Diagram showing a shift on the supply curve to the left and rise in price and fall in quantity.

Explain the diagram  

a decrease in supply will lead to a rise in the equilibrium price and a fall in equilibrium quantity.

The case for government intervention:

• to provide public goods
• to provide merit goods 
• to  reduce  the  demand  for  demerit goods 
• to  encourage  positive  externalities and discourage negative externalities
• to  control/discourage  monopolies  if these work against the public interest
• to overcome information failure

The case against intervention:

• intervention may lead to inefficient firms   being   supported   by   the government finance   
• needed   to   pay   for intervention will need to come from somewhere  and  there  will  be  an opportunity cost involved in terms of the alternative uses that the money could have been put to.
• nationalisation may put politicians in charge rather experienced/knowledgeable business people

This is a 4 marks questions. Therefore, the answer should go beyond just the definition and should include atleast two comparisons.

1. Labour is human/effort/workers’ services, whilst enterprise is the ability and willingness to bear uncertain risks/organise other factors of production.
2. The reward for labour is wages whereas the reward for enterprise is profit 
3. Enterprise tends to be more geographically or occupationally mobile than labour