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Difficulty: MediumFactors of Production and Their Rewards

Match each economic resource contribution described under Column I with its corresponding reward under Column II.

  • Natural gifts whose total supply to the overall economy is completely inelasticRent
  • Mental or physical effort directed toward commercial operations in return for contractual incomeWages
  • Man-made productive assets utilized to facilitate efficient manufacturing processesInterest
  • The risk-bearing entity that organizes other inputs and claims variable residual returnsProfit

Answer

Natural gifts with inelastic supply match with Rent; human mental and physical effort matches with Wages; man-made productive assets match with Interest; and the risk-bearing organizing factor matches with Profit.
Each economic input is accurately paired with its reward: Land receives rent due to its natural and inelastic supply, Labour earns wages for human mental and physical exertion, Capital yields interest as a return on man-made productive tools, and Enterprise garners profit for organizing resources and carrying business risk.

Step-by-Step Solution

1
Identify the factor of production described in each item of Column I.
The descriptions correspond to Land (fixed supply), Labour (human effort), Capital (man-made tools), and Enterprise (risk-bearing organization).
Each factor of production possesses unique operational characteristics that distinguish it from others.
2
Pair each identified factor with its distinct economic payment.
Land receives Rent, Labour earns Wages, Capital yields Interest, and Enterprise secures Profit.
Economic rewards are assigned based on whether the income is contractual (wages, rent, interest) or residual/uncertain (profit).

Key Concept

Factors of production (Land, Labour, Capital, Enterprise) and their corresponding economic rewards (Rent, Wages, Interest, Profit).
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Topics

Factors of Production and Their Rewards

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