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CMA Foundation · Fundamentals of Business Economics and Management · Means of Production

In economics, the factor of production that organises land, labour and capital and bears the risk of uncertain returns is called:

The entrepreneur is the factor of production that organises land, labour and capital and bears the risk of uncertain returns. The other factors earn contractual payments, whereas the entrepreneur takes decisions and accepts uncertainty, with profit or loss as the reward or penalty.

  1. AEntrepreneurCorrect
  2. BLabour
  3. CCapital
  4. DLand

Explanation

The entrepreneur brings the other three factors together, takes decisions and bears the uncertainty of the business. Labour supplies effort, capital supplies man-made resources for production, and land supplies natural resources. None of these three takes the risk of uncertainty.

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