Factors of production: capital and labor improvements

Steps:

• Identify the four factors of production: land (natural resources), labor (human effort), capital (tools and equipment), and enterprise (entrepreneurship).
• Analyze the replacement of airplanes: this upgrades physical equipment, which is capital.
• Analyze the retraining of pilots: this enhances workers' skills, which is labor.
• Confirm no changes to land or enterprise are mentioned.

Why A is correct:

• Capital includes manufactured goods like airplanes for production; labor includes skilled human input like trained pilots, per standard economic definitions.

Why the others are wrong:

• B: Land (e.g., routes or fuel sources) is not addressed.
• C: Enterprise (risk-taking and organization) is implied but not improved; focus is on capital and labor.
• D: Neither land nor enterprise shows direct improvement.

Final answer: A