Interest is the reward for which factor of production?
Answer and explanation
Correct answer: Capital
Interest is the return earned by capital when financial funds, machinery, equipment, or other produced resources are used in production. Hence, option C, capital, is correct. Land earns rent, labour earns wages, and entrepreneurship earns profit. The question uses the standard classification of factor incomes, so the other three options represent different rewards.
Frequently asked questions
What is the correct answer to this question?
Capital
Why is this the correct answer?
Interest is the return earned by capital when financial funds, machinery, equipment, or other produced resources are used in production. Hence, option C, capital, is correct. Land earns rent, labour earns wages, and entrepreneurship earns profit. The question uses the standard classification of factor incomes, so the other three options represent different rewards.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - Market price and factor cost.
