Chapter 13R, Problem 1MCQ

To determine

The correct option that define the factors of production.

Answer to Problem 1MCQ

Option d is correct.

Explanation of Solution

Explanation for correct option:

d.

Factors of production are majorly categorized as land, labor, capital and entrepreneurship that can be combined to form goods and services. For instance, if a firm produces a pen then it requires a land at which factory set up can be done by suing capital whereas with the use of labor firm can start its entrepreneur. Therefore, option d is correct.

Explanation for incorrect options:

a.

Instead of money or cash, capital can be more appropriate where various assets or equipments can be termed as capital used by the firm. Therefore, option a is incorrect.

b.

Land is one of the major factor of production as without land firm cannot set up its factory. Land is essential for conducting production process. Therefore, option b is incorrect.

c.

Money is narrower term than the capital whereas capital includes everything i.e. money, machines, equipments, etc. Therefore, option c is also incorrect.

e.

Capital is one of the major resources of production. For instance, a novelist cannot type its book without a typewriter. A typewriter is an equipment that falls under the capital. Therefore, option e is incorrect.

Economics Concept Introduction

Factor of production: Factor of production refers to the components or the resources that are required for producing intangible or tangible products.