Question

What is the remuneration of capital ?

• A. Rent
• B. Wages
• C. Interest
• D. Mixed income

Hint:

Memorize the four pairs of factors of production and their returns: Land \(\rightarrow\) Rent, Labour \(\rightarrow\) Wages, Capital \(\rightarrow\) Interest, Entrepreneur \(\rightarrow\) Profit. This is a fundamental concept in economics.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
In economics, there are four factors of production that are used to create goods and services. Each of these factors earns a specific form of income or remuneration for its contribution.

Step 2: Detailed Explanation:
The four factors of production and their corresponding remunerations are: \begin{enumerate} \item Land: The remuneration is Rent. \item Labour: The remuneration is Wages. \item Capital: (e.g., machinery, tools, money invested) The remuneration is Interest. \item Entrepreneurship: The remuneration is Profit. \end{enumerate} Therefore, the remuneration for the use of capital is interest.

Step 3: Final Answer:
The remuneration of capital is Interest.