who takes a risk and creates the business using the other three factors of production. A) Factors of production are also known as resources. B) money. The model assumes that the economy has factors of production that are fixed in both quantity and quality. Given the economy’s factors of production and technology, the economy can produce various combinations of the two goods. B) private decisions do not result in an efficient allocation of scarce resources. These are often scarce resources. Factors of production are the inputs needed for the creation of a good or service. Things like labor, entrepreneurship, land and capital are common examples of these. ... Enterprise - This is the entrepreneur. Because of this shortage, economic goods have a positive price in the market. D) Only those resources that are privately owned are counted as factors of production. Member since 20 June, 2011. An entrepreneur combines the other three factors of production to add to supply. A factor of production that has been produced for use in the production of other goods and services is: A) labor. D) natural resources. The most successful are innovative risk-takers. What is the fundamental problem of economics: Scarcity: What are the four factors of Production: Land, Labor, Capital, entrepreneurs Answer: D Type: Definition Page: 4 14. C) Factors of production include land, labor, capital, and entrepreneurship. When illustrated graphically, the production possibilities model typically limits our analysis to two goods.   According to Eraser, “Factor of production as a group or class of original productive resources.” The production process of an organization can be efficient, if there is an optimal use of factors. Scarce goods are those for which the demand would be greater than the supply if their price were zero. C Market failure occurs when: A) markets are competitive. The factors of production include land, labor, entrepreneurship, and capital. The production can be increased only by increasing the quantity of the variable factors or by having additional shifts or by increasing the hours of work. Thus, if the input is scarce in relation to the need for it, it is regarded as a factor of production. Prateek Agarwal’s passion for economics began during his undergrad career at USC, where he studied economics and business. Factors of Production An alternative term used by economists when talking about resources. Prateek Agarwal. Factor of production that includes natural resources not created by humans: Capital: factor of production that includes tools, equipment, machinery, and factories used in the production of goods and services. B) In order to produce anything, it is necessary to have factors of production. This implies that the factors of production should be used in combination, so that the production … The factors of production attempt to instill the idea that resources are scarce. 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