Multiple Choice
In which market would a producer buy the equipment and technology needed to manufacture bicycles?
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0. Basic Principles of Economics
Factors of Production
Multiple Choice
Which of the following best describes 'capital' as a factor of production?
A
The physical and mental effort provided by workers
B
Tools, machinery, and equipment used to produce goods and services
C
The entrepreneurial ability to organize resources and take risks
D
Natural resources such as land, water, and minerals
Verified step by step guidance1
Understand that in microeconomics, factors of production are the inputs used to produce goods and services. These typically include labor, capital, land, and entrepreneurship.
Identify 'capital' specifically as one of these factors. Capital refers to man-made resources that aid in production, such as tools, machinery, and equipment.
Differentiate capital from other factors: labor is the physical and mental effort by workers; land includes natural resources like water and minerals; entrepreneurship involves organizing resources and taking risks.
Recognize that the correct description of capital is 'tools, machinery, and equipment used to produce goods and services' because these are tangible assets created to help production.
Conclude that among the given options, the one describing capital as physical tools and machinery is the best fit for the economic definition of capital.
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