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JAMB Economics 1980 Question 32

Question 32

Theory of Production

Capital earns income because

  1. A.it is productive
  2. B.it is expensive
  3. C.it is always cheaper to substitute capital for labour
  4. D.it is technically more efficient than labour
  5. E.both A and B above.
Show the answer and explanation

Answer: A (it is productive)

Explanation

Capital helps produce more output, and its reward (interest) is paid because of this productivity.