Match each factor of production on the left with its corresponding economic reward and defining characteristic on the right.
- LandEarns rent; natural gift whose total supply is fixed and perfectly inelastic.
- LabourEarns wages or salary; human physical or mental effort in production.
- CapitalEarns interest; man-made wealth or assets used to produce further wealth.
- EntrepreneurshipEarns profit; residual income for organizing production and bearing uninsurable risks.
Answer
Land is matched with Rent (fixed natural supply), Labour with Wages/Salaries (human effort), Capital with Interest (man-made productive assets), and Entrepreneurship with Profit (residual return for risk-bearing).
Each factor of production contributes a specific economic role and receives a designated type of return: Land earns Rent due to its fixed natural availability; Labour receives Wages for human productive effort; Capital earns Interest as a return on accumulated wealth used for production; and Entrepreneurship receives Profit as a residual return for decision-making and risk-taking.
Step-by-Step Solution
Key Concept
Factors of Production and Their Rewards