CMA Foundation · Fundamentals of Business Economics and Management · Means of Production
Which function is performed specifically by the entrepreneur (enterprise) rather than by other factors of production?
The entrepreneur organises the other factors of production and bears the uncertainty and risk of the business. The reward is profit, which is uncertain and residual. Supplying natural resources, labour effort or capital goods are functions of other factors.
- ASupplying natural resources for production
- BBearing the uncertainty and risk of the business and organising the other factorsCorrect
- CProviding physical effort at a fixed wage
- DSupplying machinery on hire for an interest payment
Explanation
The entrepreneur organises land, labour and capital and bears the uncertainty of production, earning profit as the residual. Natural resources are land, fixed wages are labour, and hired machinery related to capital.
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