Match the following:
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Group A
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Group B
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1. Production
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a. Profit
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2. Land
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b. Captain of industry
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3. Labour
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c. Creating utility
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4. Reward of capital
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d. Rent
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5. Reward of entrepreneur
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e. Interest
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f. Wages
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Answer:
|
Group A
|
Group B
|
|
1. Production
|
c. Creating utility
|
|
2. Land
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d. Rent
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|
3. Labour
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f. Wages
|
|
4. Reward of capital
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e. Interest
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5. Reward of entrepreneur
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a. Profit
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Explanations:
1. Production is the process of converting inputs (raw materials) into outputs. Since in the production process, goods and services are created to satisfy human wants, it can be regarded as the process of creating utilities.
2. Land is a primary factor of production and rent is the factor payment. That is, rent is the income received by the land owner in return for the services provided by him/her in the production process.
3. Wages are the income received by the labour (factor of production) in return for the services provided by them in the production process. Thus, wages are the returns to the labourer.
4. Interest is the reward of capital. A moneylender or a capital owner receives interest on the amount of capital contributed by him in the production.
5. An entrepreneur organises the production process by hiring all the services of all the factors to produce the output. He sells this in the market and remunerates the factor. For his dare in undertaking the risk of production, he receives profits in return.
