Factors of Production and Their Rewards

Steps:

• Recall the four main factors: land, labor, capital, and enterprise.
• Identify each factor's reward: rent for land, wages for labor, interest for capital, profit for enterprise.
• Evaluate choices against standard definitions in economics.
• Select the option that accurately matches a factor to its reward.

Why D is correct:

• Profit is the reward for enterprise, as defined in economic theory, compensating the entrepreneur for risk-taking and organization of other factors.

Why the others are wrong:

• A: Capital refers to physical assets like machinery and tools, not just borrowed money, which is financial capital used to acquire it.
• B: Labor is the human effort and skills provided by workers, not the output they produce, which is the result of all factors.
• C: Land is natural resources in their raw state; commercially grown rice crops involve labor and capital, so they are not purely land.

Final answer: D