Syllabus: AQA - GCSE Economics
Module: 3.1.1 Economic Foundations
Lesson: 3.1.1.2 The Factors of Production

Introduction

The AQA GCSE Economics specification (8136) introduces students to foundational economic principles. Within 3.1.1 Economic Foundations, the sub-topic 3.1.1.2 The Factors of Production focuses on the four essential resources required to produce goods and services: land, labour, capital and enterprise.

This section underpins students’ understanding of how economies function and lays the groundwork for more complex economic models. Its inclusion supports both curriculum delivery and careers guidance, aligning directly with Gatsby Benchmark 4: Linking Curriculum Learning to Careers.

Key Concepts

The AQA specification expects students to:

• Understand what economic resources are.

• Identify and explain the four factors of production:

  • Land – natural resources (e.g. oil, water, farmland).

  • Labour – human effort (physical or mental).

  • Capital – man-made goods used in production (e.g. machinery).

  • Enterprise – the entrepreneur who organises the other factors and takes on risk.

• Know the reward associated with each:

  • Land → Rent

  • Labour → Wages

  • Capital → Interest

  • Enterprise → Profit

Students are also expected to apply these concepts in different economic contexts and consider their role in resource allocation and decision-making.

Real-World Relevance

The factors of production are not just theoretical concepts—they shape every economic activity around us. Consider:

• Labour shortages in the NHS and logistics sectors: Highlight the value of human capital and the need for upskilling.

• Land use debates such as for HS2 or housing developments: Showcase the trade-offs between economic gain and environmental impact.

• Investment in AI and automation: Represents shifts in capital as businesses aim to increase productivity with less reliance on traditional labour.

• Entrepreneurial initiatives during COVID-19: From mask production to delivery services, enterprise played a key role in economic resilience.

Embedding these examples helps students connect theory with the dynamic realities of the UK economy.

How It’s Assessed

This topic is assessed through a mix of:

• Multiple-choice questions (MCQs) – requiring identification of definitions or examples.

• Short-answer questions – asking for explanations or the naming of factors and rewards.

• Data response and context questions – applying knowledge to case studies or news extracts.

• Extended writing (6- or 9-mark questions) – requiring students to evaluate how changes in one or more factors affect production or costs.

Command words often used include:

• Identify, Explain, Describe, Analyse, and Evaluate.

It’s important students understand key terminology and can apply it flexibly in unfamiliar contexts.

Enterprise Skills Integration

Understanding the factors of production builds directly into key enterprise competencies:

• Strategic Decision-Making – choosing how to allocate limited resources mirrors real business dilemmas.

• Problem-Solving – assessing trade-offs between labour and capital investments.

• Team Collaboration – reflecting the interdependence of different factors in a workplace setting.

• Resilience and Adaptability – especially in the context of enterprise and the risks taken by entrepreneurs.

Enterprise Skills’ simulations further this understanding by letting students roleplay business scenarios where they must choose how to combine land, labour, capital, and enterprise for maximum efficiency.

Careers Links

This unit is ideal for mapping to Gatsby Benchmarks 4, 5 and 6:

• Benchmark 4: Links curriculum directly to careers by exploring how different industries use and value each factor of production.

• Benchmark 5: Opportunities to embed employer case studies (e.g. how Amazon invests in automation vs warehouse staff).

• Benchmark 6: Use of business simulations where students act as entrepreneurs deciding how to combine resources for success.

Related career paths include:

• Project management

• Manufacturing and engineering

• HR and workforce planning

• Land surveying and property development

• SME entrepreneurship

Teaching Notes

Tips for effective delivery:

• Use physical or digital flashcards to reinforce the link between each factor and its reward.

• Apply a “resource mix” scenario task: students must choose how to allocate a budget between land, labour, capital and enterprise to start a fictional business.

• Leverage local context—e.g. urban redevelopment projects or new school facilities—as discussion prompts about land use or enterprise decisions.

Common pitfalls:

• Students confusing capital with money.

• Overlooking the difference between labour (a factor) and employees (in practice).

• Forgetting the reward associated with each factor.

Extension activities:

• Invite a local entrepreneur to talk about resource choices in setting up their business.

• Use simulations to model resource allocation and evaluate outcomes.

• Task students with analysing a company’s use of the factors of production using a recent news article.