Theory question 102
ProductionCommerce 2 (essay)
(a) What is production?
(b) Explain the following factors of production:
(i) land;
(ii) labour;
(iii) capital
(c) State three functions of an entrepreneur.
Show the model answer
(a) Production is the creation of goods and services to satisfy human wants; it is complete only when they reach the consumer.
(b)(i) Land – all natural resources (soil, minerals, water, forests); its reward is rent.
(ii) Labour – human effort, mental or physical, used in production; its reward is wages.
(iii) Capital – man-made goods used to produce other goods (machines, buildings, tools); its reward is interest.
(c) Any three: organises/combines the other factors; provides capital; bears risks; takes decisions; innovates; supervises the business.
Give the reward of each factor as well as its meaning.