Reference: Prescribed book PG 60
Households own factors of production (natural resources, labour, capital and entrepreneurship). They
sell these factors to firms in the factor markets and receive rent (natural resources), wages and
salaries (labour), interest (capital) and profit (entrepreneursh...
PREVIEW OF QUESTION 1
1. 4 Reference: Prescribed book PG 60
Households own factors of production (natural resources, labour, capital and entrepreneurship). They
sell these factors to firms in the factor markets and receive rent (natural resources), wages and
salaries (labour), interest (capital) and profit (entrepreneurship). Firms combine these factors of
production to produce goods and services that are sold in the goods markets to households who use
the income (derived from selling their factors of production) to purchase the goods and services.
This study source was downloaded by 100000838690865 from CourseHero.com on 06-02-2023 09:38:55 GMT -05:00
Households own factors of production (natural resources, labour, capital and entrepreneurship). They
sell these factors to firms in the factor markets and receive rent (natural resources), wages and
salaries (labour), interest (capital) and profit (entrepreneurship). Firms combine these factors of
production to produce goods and services that are sold in the goods markets to households who use
the income (derived from selling their factors of production) to purchase the goods and services.
2. 2 Reference: Prescribed book PG 41
3. 4 Reference: Prescribed book PG 50
4. 4 Reference: Prescribed book PG 42
There are four main factors of production: natural resources (or land), labour, capital and
entrepreneurship. Natural resources and labour are sometimes called primary factors of production,
while capital and entrepreneurship are called secondary factors. Another possible distinction is
between human resources (labour and entrepreneurship) and non-human resources (natural
resources and capital).
5. 4 Reference: Prescribed book PG 46
The remuneration of natural resources (or land) is called rent. Wages and salaries are the
remuneration of labour, while the remuneration of capital is called interest. Finally, profit is the
remuneration of entrepreneurship. The total income in the economy thus consists of rent, wages and
This study source was downloaded by 100000838690865 from CourseHero.com on 06-02-2023 09:38:55 GMT -05:00
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