Question

Which of the following is not a factors of production?
1. Fixed capital
2. Working capital
3. Dividend earned by entrepreneur
4. None of the above

Answer 1

Correct Answer - Option 2 : Working capital

The correct answer is Working capital.

• Factors of Production are the resources used by people to produce goods and services.
• The factors of production are divided into four categories:
  • Land
  • Labour
  • Capital
  • Entrepreneur.
• The earnings made by the use of these factors of production is known as factor income.
• Land gives rent, labourer gets wages, capital earns interest and entrepreneur enjoys profit.
• Fixed capital refers to the capital that is not consumed or destroyed in the production of goods and services for example- plant and machinery, tools and equipment, property and building, etc.
• Working capital is the capital required by the business for day-to-day operations for example- raw materials, finished goods, spares, etc.