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Question

Difficulty: EasyFactors of Production and Their Rewards

Match each factor of production on the left with its corresponding economic reward on the right.

  • LandRent
  • LabourWages
  • CapitalInterest
  • EnterpriseProfit

Answer

Land matches with Rent, Labour matches with Wages, Capital matches with Interest, and Enterprise matches with Profit.
Each factor of production earns a unique economic return based on its role in the productive process: Land earns Rent, Labour earns Wages, Capital earns Interest, and Enterprise earns Profit.

Step-by-Step Solution

1
Identify the reward for natural resources (Land).
Land earns Rent.
Rent is paid to owners for the use of land and natural gifts.
2
Identify the reward for human work effort (Labour).
Labour earns Wages.
Wages compensate human effort expended in the production process.
3
Identify the reward for invested physical and financial assets (Capital).
Capital earns Interest.
Interest is the return accrued to capital for enabling production.
4
Identify the reward for risk-taking and business decision-making (Enterprise).
Enterprise earns Profit.
Profit is the residual return to the entrepreneur for organizing production and bearing business risks.

Key Concept

Factors of Production and Their Rewards
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Topics

Factors of Production and Their Rewards

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