Ex.25. Before reading

Ex.24. Answer the following questions.

Ex.23. Read the text again and decide whether the following statements are true or false. Correct the false statements.

Ex.22. Read the text. Choose the best sentence A-G to fill each of the gaps 1-7. Do not use any sentence more than once. There is an example at the beginning.

0 These are four generally recognized factors of production.

AIncreasingly, theory has come to treat any investment as a capital investment.

B Before the twentieth century, only three factors making up the "classical triad" were recognized: land, labour, and capital.

CNow there are entrepreneurial financiers as well as entrepreneurial producers and distributors.

DMarginalists held that any factor of production could be scarce.

ETheir answer was that it came from labour.

FThis led them to attribute productivity to equipment rather than only to labour.

GThus the physiocrats explained land rent as coming from surplus produced by the land.

1. Entrepreneurship is a fairly ancient addition.

2. A major conceptual application is in the theory of production functions.

3. For the Spanish physiocrats led by Francois Quesnay in the 1750s and 1760s, land was the only factor yielding a reliable gain to its owner.

4. The classical economists assumed only land—understood as natural resources—could be scarce in the short term.

5. Marginal productivity is the extra output obtained by extending a constant amount of labour and capital over an additional unit of land of uniform quality.

6. Classical economists tried to answer the question: Where does profit come from?

7. Technical innovation decreases labour productivity.

8. Choice among production techniques involving different combinations of labour and capital became a major theme in classical growth theory.

9. Frequently capital is treated as finance, associated with the payment of interest.

10. In the marginalist view, profit rather than interest was attributed to ownership of capital.

 

1. What is the factor concept used for?

2. Where could proprietors collect surplus (for the French physiocrats)?

3. What does the value of a crop depend on?

4. What does rent reflect (in the marginalist view)?

5. What question do classical economists tried to answer?

6. What increases labour productivity?

7. What became a major theme in marginalist growth theory?

8. How is capital defined?

9. How is capital treated frequently?

10. What is the entrepreneur's role in The Theory of Economic Development?

Text C: Factors of Production for an Innovation Economy

Can you anticipate what an innovation economy is?