CA Foundation · Business Economics · Theory of Production and Cost
Which of the following is correctly classified as a factor of production together with the form of its reward?
Land is correctly paired with rent. In the standard classification, land earns rent, labour earns wages, capital earns interest and the entrepreneur earns profit. The other options mismatch factors with rewards, so only land with rent is correct.
- ALand – rentCorrect
- BLabour – interest
- CCapital – wages
- DEntrepreneur – rent
Explanation
The standard pairings are land with rent, labour with wages, capital with interest and entrepreneur with profit. Only the first option matches correctly. Labour earning interest and capital earning wages reverse the rewards, and rent is not the entrepreneur's reward.
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