Which of the following is treated as a reward for a productive service in the income method?
Answer and explanation
Correct answer: Wage received by a worker for labour provided in production
The income method measures factor incomes earned by providing productive services. Wages are paid to labour for its contribution to the production process, so they are included as compensation of employees. A donation, scholarship and lottery prize are transfer or non-factor receipts because the recipient does not provide a current productive factor service in exchange for them. Therefore option A is the only correct answer.
Frequently asked questions
What is the correct answer to this question?
Wage received by a worker for labour provided in production
Why is this the correct answer?
The income method measures factor incomes earned by providing productive services. Wages are paid to labour for its contribution to the production process, so they are included as compensation of employees. A donation, scholarship and lottery prize are transfer or non-factor receipts because the recipient does not provide a current productive factor service in exchange for them. Therefore option A is the only correct answer.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Income Method.
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