CMA Foundation · Fundamentals of Business Economics and Management · Means of Production
Which function is performed specifically by the entrepreneur as the fourth factor of production?
The entrepreneur organises the other factors of production and bears the risk of uncertainty, earning profit as a residual reward. Providing natural resources, labour effort or loaned funds are functions of land, labour and capital respectively.
- ASupplying natural resources to the firm
- BProviding physical effort for wages
- CLending money to the firm for interest
- DOrganising the other factors and bearing the risk of uncertaintyCorrect
Explanation
The entrepreneur combines land, labour and capital and bears the uncertainty of production, and is rewarded by profit, which is a residual. Supplying funds is capital, and physical effort is labour.
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