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CMA Foundation · Fundamentals of Business Economics and Management · Utility, Wealth, Production

Which of the following is a characteristic that distinguishes land as a factor of production in economics?

Land has a fixed total supply for the economy as a whole because it is a free gift of nature and cannot be created by human effort. Its reward is rent, it is not produced, and it is geographically immobile, so the other statements are incorrect.

  1. AIts total supply is fixed for the economy as a wholeCorrect
  2. BIts reward is called wages
  3. CIt is a produced means of production
  4. DIt is perfectly mobile between all uses

Explanation

Land, as a gift of nature, has a fixed total supply from the viewpoint of the whole economy. Its reward is rent, not wages. It is not man-made, so it is not a produced means of production. It is also not perfectly mobile, since geographically it cannot be moved.

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