Factors of production and economic sectors

In Grandma Carmen's bakery, all four factors of production are involved. Classify each element into natural resources, labour, physical capital, or technology and knowledge: (a) the wheat and firewood; (b) the oven and dough mixer; (c) the baker and her assistant; (d) the bakery premises; (e) the sourdough recipe and the pastry-making course taken by the assistant.

The 'Piñón Fijo' bicycle workshop also uses the four factors of production. Classify each item as natural resources, labour, physical capital or technology and knowledge:

1. a) The lubricating oil and the steel of the parts.
2. b) The workshop's two mechanics.
3. c) The lift and the tools.
4. d) The e-bike course they took and their customer database.

Point out which of the four weighs more and more in businesses and explain why.

The bakery invests $1.200\ \text{€}$ in a new dough mixer and $300\ \text{€}$ in a pastry-making course for the assistant.

1. a) State which of the two investments is physical capital and which is human capital, and explain the difference.
2. b) Reason how each improves the bakery's production and why human capital is said to "travel inside the person": what happens to that investment if the assistant leaves for another bakery?

Classify these jobs into the primary, secondary, or tertiary sector, and state which one could also fit into the quaternary sector (knowledge and innovation): (a) a sheep shepherd; (b) a welder in a shipyard; (c) a delivery driver; (d) a strawberry farmer; (e) a video game programmer; (f) a carpenter who makes furniture. Explain the criterion you used.

Follow the bread chain: the farmer sells a kilo of wheat at $0,30\ \text{€}$; the mill turns it into flour and sells it at $0,60\ \text{€}$; the bakery turns it into loaves worth $2\ \text{€}$ for the equivalent of that kilo.

1. a) Classify each link into its economic sector.
2. b) Calculate the value added of each stage (how much the value increases at each step) and explain why it increases.

An agricultural cooperative sells tomatoes at 0,35 €/kg to a local cannery. To produce each jar of preserves, the factory uses 1,5 kg of tomatoes and other supplies valued at 0,25 € (jar, oil, energy), selling the finished product to a wholesaler for 1,40 €. Next, a supermarket purchases the batch and sets the retail price at 2,10 € per jar. Finally, a digital home delivery platform charges a flat fee of 1,90 € to deliver the purchase to the consumer's home.

1. a) Calculate the value added generated by each of the four links in the chain and identify which sector of economic activity each agent belongs to.
2. b) Assume that an extreme drought makes the cost of tomatoes in the field 60 % more expensive. Predict how this cost increase will be transmitted along the chain: which participants have a greater capacity to pass on the price increase to the final price, and who will bear a greater loss of margin? Justify your answer.
3. c) Design a viable strategy for the agricultural cooperative to increase its share of value added without depending exclusively on the industrial cannery.

In Marco's grandmother's village, out of every $100$ employed residents, in $1975$ there were $55$ working in agriculture, $25$ in manufacturing, and $20$ in services. Today, there are $8$ in agriculture, $22$ in manufacturing, and $70$ in services.

1. a) Calculate the percentages for each era and summarise which sector has collapsed and which has grown.
2. b) Give two reasons explaining this change (machines do the work of many people in agriculture; as earnings increase, people spend more on services).

In a parliamentary debate on regional budgets, a representative states: "The primary sector barely generates 2,4 % of GDP and only employs 3,9 % of the workers in our country; maintaining incentives for this sector is an anachronism belonging to the past, and we should devote all resources to services and technology".

1. a) Rebut the representative's statement by analysing the discrepancy between the direct accounting weight of a sector and its strategic nature for an economy (food sovereignty, territorial balance, and global supply chains).
2. b) Resolve the apparent paradox: how is it possible that a sector employing fewer than 4 out of every 100 workers can produce enough food to supply the population and even export surpluses? Relate your explanation to productivity and capital intensity.
3. c) Predict two economic effects and two environmental effects that the country would suffer in the medium term if it decided to dismantle its agricultural sector to depend 100 % on foreign imports.

A Spanish business group dedicated to footwear manufactures handcrafted shoes in Alicante and manages its own retail stores. To reduce costs, management decides to relocate the cutting and sewing workshops to a non-EU country where labour costs are 70% lower, but keeps its R&D headquarters, graphic design, central logistics, and commercial store network within the national territory.

1. a) Justify why certain activities along the production chain can be geographically relocated with relative ease while retail services or design exhibit strong territorial inertia.
2. b) Analyse the economic impact on the region of origin: in addition to direct unemployment in the workshops, what spillover effect will auxiliary companies (tanners, packaging, technical maintenance) and the local service sector suffer?
3. c) Design two economic policies that a local or regional government could implement to retain industrial companies without resorting to wage devaluation or protectionist trade barriers.

Explain in your own words what productivity is — how much is produced with the same means and in the same time — with this school example: two teams make bracelets for the school market; one turns out $30$ per hour and the other, $45$, with the same materials and the same people.

1. a) Name two things that can explain the difference (organisation, practice, better tools).
2. b) Argue why it is in a country's interest for its companies to become ever more productive.

Two artisan bakeries make the same bun. Rosa's produces $400$ buns a day with $4$ workers; Mihai's, $600$ with $5$.

1. a) Calculate the productivity of each bakery (buns per worker per day) and say which is more productive.
2. b) Propose two ways for Rosa's bakery to raise its productivity without hiring anyone (better organisation, a machine, training) and one drawback of each.

An industrial carpentry workshop is considering modernising its shop floor by purchasing an automated machining centre for 90.000 €. The machine performs the cutting of parts currently executed by two workers, whose wages and social security contributions cost the company 18.000 € per year per person. Operating and maintaining the robot will involve a cost of 6.000 € per year. In addition, the robot's greater precision will reduce wood waste by 500 € per month.

1. a) Identify which substitution of productive factors takes place and calculate the exact payback period (in years) of the investment, considering savings in labour as well as savings in raw material consumption and the technical additional cost.
2. b) Management is considering not laying off the two workers, but rather reallocating them to computer-aided design and custom artisanal finishes, which would generate an additional 1.800 € net per month from custom furniture. Evaluate numerically whether purchasing the robot is still viable with this decision and reflect on the concept of opportunity cost faced by the company.
3. c) Explain what impact the introduction of the robot will have on the labour productivity of the staff who continue working in the factory.