Information as a factor of production

As a factor of production, information is unlike any of the other factors in many important aspects. These differences cause the need for decision-makers to re-evaluate the way in which productive factors are combined to produce goods and services. Information is expansible, compressible, substitutional, transportable, diffusive, and shareable.

Information is Expansible. Most information tends to expand with use. Thus, as information is used — even more is generated. The only limits on the use of information would be the capacity of users to analyze, store and retrieve it. The non-scarce nature of information must bring about a rethinking of the calculus of utility maximization or cost minimization.

Information is Compressible. It is possible to concentrate, integrate, or summarize vast amounts of information for easier handling. Through the selection and compression of information into knowledge and wisdom, some of it is necessarily lost.

Information is Substitutional. The evolution of mental processes which leads managers to think of information as a factor of production must also cause them to grasp the idea that information can be substituted for land, labour, capital, entrepreneurial ability and management. When other resources are used more efficiently (i.e. less of the resource is used due to the use of new information), the net result is a substitution of information for the more efficiently used resource in the productive process.

Information is Transportable. Using telecommunications technology, information can be transported at the speed of light! Thus, it provides a lightning response time for decisions. While some cost is involved in the "transportation" of information, its speed and lack of physical bulk should keep this cost relatively low.

Information is Diffusive. Information tends to leak. Because information lends itself to diffusion; secrecy, property rights, and confidentiality, are called into question. Yet, because information is easily "transported," potentially authorized users can have ready access to it. At the same time, processes can be established to deny, or limit, its pilferage. That is, ways should be found to secure it in much the same manner as the other factors of production without overly restricting the legitimate "transportation" of information.

Information is Shareable. That is, I may give information to you without losing it myself. If information is shared — we both have it! My stock is not diminished because yours is increased. In fact, the same information can be sold or exchanged again.

Language notes:

endangered species – зникаючі види

output – обсягвиробництва, готовапродукція, виробництво

marginal product of labour – граничний продукт праці

piece rate – відрядна розцінка, розцінка від виробітку

the salient characteristics - основні характеристики

ready access – вільний доступ

pilferage – розкрадання

overly restrict – надмірно обмежувати

Vocabulary focus

Ex.1. Find the English equivalents in the text.

Товари та послуги; служити інтересам людей; робоча сила, наявна в народному господарстві країни; осушені і засипані водно-болотні угіддя; загальна кількість та особливі якості; не змінюючи форму чи місце розташування; капітал зношується з часом; внесок працівників у процес виробництва; потенційні працівники отримують освіту та практику; носієм робочої сили є людина; збільшення середньої кількості робочого часу за тиждень; граничний продукт у грошовій формі; середня кількість робочих годин на рік; спад рівня народжуваності;вирішення проблеми; виробіток на одного працівника; погодинна оплата; здатність користувачів аналізувати; мінімізація витрат; підприємницькі здібності; більш ефективно використаний ресурс; вартість передачі інформації; право власності; запас інформації не зменшується.

Ex.2. Give Ukrainian equivalents of the following words and phrases.

Factors of production; an economy’s factors of production create utility; the human effort that can be applied to; raw materials, vegetation and wildlife; the expanding city; capital depreciates from time and use; productive contributions of labour; actual workers obtain new skills; the aim to create goods and services; to increase the number of people available to work; revenue for labour; marginal product of labour; the employees and unemployed; а low activity rate; to join the workforce; to raise the retirement age; an economy’s labour productivity; unemployment rate; the level of nominal wage; to expand with use; the calculus of utility maximization; vast amounts of information; selection and compression of information; other resources are used more efficiently; at the speed of light.

Ex.3. Give three forms of the following verbs. Find the sentences with these verbs in the text.

Can, be, have, undertake, do, mean, make, take, wear, get, grow, find, bring, learn, read, fall, rise, raise, lose, lead, think, cost, keep, leak, lend, give, sell.

Ex.4. Match the words on the left with the definitions on the right.

1	factor of production	a	the worth of something in terms of money or other goods for which it can be exchanged
2	land	b	pay, usually of nonmanual workers, often expressed in annual terms
3	labour	c	the total satisfaction derived from the consumption of goods and services
4	capital	d	an input such as land or any natural resources, labour, capital, and entrepreneurship, combined in the production process to produce goods and services in an economy
5	information	e	payment for the work done
6	goods	f	equipment for doing something
7	services	g	a business firm
8	resources	h	accumulated wealth, especially as used in further production
9	salary	i	the human effort required to produce goods and services
10	value	j	tangible commodities or merchandise
11	wage	k	quantity of goods and services produced or provided by a business organization or economy
12	facilities	l	stock that can be drawn on
13	utility	m	the factor of production which comprises not just land itself but all natural resources. (Shoals of fish, natural forests, the atmosphere, and rivers).
14	enterprise	n	what is told, knowledge
15	output	o	tangible commodity or merchandise

Ex.5. Make up verb+noun collocations (there may be several variants).

to produce	activities
to derive from	the interests
to pursue	food
to serve	resources
to undertake	goods and services
to acquire	new skills
to obtain	laws
to improve	quantity of labour
to enforce	knowledge
to increase	human capital

Ex.6. Choose an appropriate word or phrase to complete the following sentences.

Capital stock, factor of production, human capital, human effort, labour, land, physical and mental, production process, resources, wages.

1. 'Factors of production' may also refer specifically to the primary factors, which are stocks including land, __________ (the ability to work), and capital goods applied to production.

2. The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly transformed by the __________ (as with fuel used to power machinery).

3. 'Land' includes not only the site of production but natural __________ above or below the soil.

4. Recent usage has distinguished __________ (the stock of knowledge in the labour force) from labour.

5. Entrepreneurship is also sometimes considered a __________ .

6. Labour is __________ used in production which also includes technical and marketing expertise.

7. The payment for someone else's labour and all income received from one’s own labour is__________ .

8. Labour can also be classified as the __________ contribution of an employee to the production of the good(s).

9. Money, however, was not considered to be a factor of production in the sense of __________ since it is not used to directly produce any good.

10. Land is often referred to as "capital", in the sense that one can buy __________ and use it as a "capital investment".

Ex.7. Fill in the gaps with appropriate prepositions or adverbs.

1. The factors _____ production _____ an economy are its labour, capital, enterprise and natural resources.

2. Capital is a factor _____ production that has been produced _____ use _____ the production _____ other goods and services.

3. Human resource consists _____ the productive contributions _____ labour made _____ individuals who work.

4. Land _____ economics means all natural resources and agents_____their sites.

5. Many developed countries are suffering _____ falling birth rates and therefore there are fewer people joining the workforce.

6. _____ a certain point wages are so high that some people value _____ free time than higher wage.

7. Real wage is amount _____ goods and services which we can buy _____ the nominal wage.

8. The non-scarce nature _____ information must bring _____ a rethinking _____ the calculus _____ utility maximization or cost minimization.

9. _____ the selection and compression _____ information _____ knowledge and wisdom, some _____ it is necessarily lost.

10. Choices concerning what goods and services to produce are choices _____ an economy’s use _____ its factors _____ production, the resources available _____ it _____ the production _____ goods and services.

Ex.8. Combine two parts logically to make complete sentences.

1	In economics, factors of production (or productive inputs or resources) are	a	water, air, soil, minerals, flora and fauna that are used in the creation of products.
2	Land or natural resource – naturally occurring goods such as	b	in the production of other goods.
3	Labour is human effort used in production which also	c	any commodities or services used to produce goods and services.
4	The capital stock – human-made goods (or means of production) which are used	d	future structures, buy machines and pay wages.
5	Acquired skills (as opposed to "know-how," an attribute of society rather than individuals) have come to be	e	buildings, machinery, tools and other productive resources used in the process of creating goods and services.
6	Capital is money needed to build	f	includes technical and marketing expertise.
7	Physical capital are things that have already been produced and	g	production together to make a good or service.
8	Financial capital refers to money that business people use to buy	h	information, but also “knowledge, collaboration, process-engagement, and time quality”.
9	An entrepreneur is someone who puts all the factors of	i	viewed as analogous to physical equipment, capable of yielding their owners a return.
10	The general opinion seems to be that the “new factor of production” is “intellectual capital”, an umbrella term that includes	j	then are used in production of other goods and services.

Ex.9. Look through the text again and replace the words/phrases in italics with similar ones.

1. Finally, economy’s factors of production create utility; they serve the interests of people.

2. Drained and filled wetlands are taken away from endangered species, and in addition, from their primal role as filters protecting coastal waters from river trash and pollutants.

3. Whenever potential workers obtain schooling and training and whenever actual workers obtain new skills, labour’s contribution to productive output will rise.

4. Although the skills, knowledge and talents of people can be improved or made more productive through education and training.

5. If the labour force increases, wages fall.

6. A low activity rate could show a high level of unemployment and/or high number of students / housewives / early retired.

7. Therefore, as information is used — even more is generated.

8. Because of the selection and compression of information into knowledge and wisdom, some of it is necessarily lost.

Ex.10. Translate into English

1. Фактори виробництва — це ресурси, необхідні для виробництватоварів або послуг.

2. Класичними факторами виробництва є робоча сила (всі розумові та фізичні здібності людей), земля (природні багатства), капітал (вже існуючі/вироблені засоби виробництва, а також фінансовий капітал).

3. Четвертим фактором виробництва вважається підприємливість, яка об'єднує попередні три фактори.

4. Інформація може бути включена як п’ятий фактор виробництва.

5. Підприємницькі здібності – це особливий вид людського капіталу, який передбачає використання ініціативи, винахідливості та ризику в організації виробництва.

6. Підприємництво – це діяльність по координації та комбінуванню всіх інших факторів виробництва з метою створення благ та послуг.

7. Природні ресурси — це все те, що людина бере з природи і за допомогою своєї праці перетворює на продукт задоволення власних потреб.

8. Земля – це природно-сировинні ресурси, а також повітря, клімат, вода, ґрунти, тобто все те, що дає природа в розпорядження людини і використовується у виробництві товарів і послуг.

9. Робоча сила є особистим фактором виробниц­тва і головною творчою продуктивною силою суспільства.

10. Робоча сила - це здатність людини до праці, результатом якої є продукт або благо.

11. Первинними факторами виробництва були земля і праця.

12. Капітал як фактор виробництва - це майно (засоби виробництва), що належать підприємцям або іншим власникам і використовуються в процесі створення товарів і послуг.

13. Особливістю капіталу є те, що він має бути кимось накопичений, створений.

14. Капітал існує лише у продуктивному використанні, саме тоді, коли його власниками одержуються доходи від користування та володіння своїм майном.

15. Обмеженнями використання інформації є здатність користувачів аналізувати, зберігати та відтворювати її.