Question

In the present age, how many factors of production are there?

• A. 3
• B. 4
• C. 5
• D. 6

Hint:

A simple acronym to remember the four factors of production is \textbf{CELL}: Capital, Entrepreneurship, Land, and Labor. This helps recall them quickly during an exam.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Factors of production are the inputs or resources used in the production process to create goods and services. These are the fundamental building blocks of an economy.
Step 2: Detailed Explanation:
Classical and neoclassical economics identify four main factors of production:
1. Land: This includes all natural resources, such as land itself, minerals, forests, and water. The payment for land is rent.
2. Labor: This refers to the human effort—physical and mental—used in production. The payment for labor is wages.
3. Capital: This includes man-made goods used to produce other goods, such as machinery, tools, and buildings. The payment for capital is interest.
4. Entrepreneurship: This is the skill of combining the other three factors to create a business, innovate, and take risks. The reward for entrepreneurship is profit.
While some modern theories suggest additional factors like technology or information, the standard and most widely accepted answer in economics is four.
Step 3: Final Answer:
There are four primary factors of production. Therefore, option (B) is the correct answer.