Payments for Factors of Production

Steps:

• Recall the four factors of production: land, labor, capital, and entrepreneurship.
• Identify standard payments: rent for land, wages for labor, interest for capital, and profit for entrepreneurship.
• Match the question's focus on "use of capital" to its corresponding payment.
• Confirm interest as the reward for lending or using capital resources.

Why A is correct:

• Interest is defined in economics as the payment for the use of capital, compensating lenders for time value of money and risk.

Why the others are wrong:

• B: Profit rewards entrepreneurship and risk-bearing, not capital use.
• C: Rent is the payment for using land or natural resources.
• D: Wage is the payment for labor or human effort.

Final answer: A