Match the following:
Factor – Return
i. Labour – A. Profit
ii. Land – B. Rent
iii. Capital – C. Wage
iv. Enterpreneurship – D. Interest

Question

Match the following:
Factor – Return
i. Labour – A. Profit                
ii. Land – B. Rent
iii. Capital – C. Wage                
iv. Enterpreneurship – D. Interest

Accepted Answer

The correct option is 3:

The relationship between the Factors of Production and their respective Returns is a core concept in Economics. Production requires four main factors, and each factor earns a specific reward for its contribution to the production process. The correct matching is as follows: Labour (i) receives Wage (C); Land (ii) receives Rent (B); Capital (iii) receives Interest (D); and Entrepreneurship (iv) receives Profit (A). Therefore, the correct pairing is A-iv (Profit for Entrepreneurship), B-ii (Rent for Land), C-i (Wage for Labour), and D-iii (Interest for Capital). This pairing reflects the fundamental payments made in an economy: wages compensate human effort, rent is the payment for the use of natural resources, interest is the reward for providing capital, and profit is the residual reward for risk-taking and organizational skills of the entrepreneur. This established economic model confirms that option 3 is the only match that correctly links all four factors to their appropriate forms of compensation.

The incorrect option is 1 (A-i; B-ii; C-iii; D-iv): This option incorrectly matches Labour (i) with Profit (A) and Capital (iii) with Wage (C). Labour is compensated with wages, which is the payment for physical or mental effort. Profit is the reward for the entrepreneur's risk and organization. Furthermore, this option misidentifies the return for Capital as Wage, when Capital is correctly compensated by Interest (D). While it correctly links Land (ii) with Rent (B) and Entrepreneurship (iv) with Interest (D), the critical mismatches for Labour and Capital make this option invalid under standard economic principles of factor returns.

The incorrect option is 2 (A-iv; B-iii; C-ii; D-i): This option makes fundamental errors in matching the factors and returns. It correctly identifies Entrepreneurship with Profit (A-iv) but incorrectly pairs Land (ii) with Wage (C). Land, being a natural resource, earns Rent (B), not Wage, which is reserved for Labour. It also mistakenly pairs Capital (iii) with Rent (B) and Labour (i) with Interest (D). Capital earns Interest (D) as the cost of borrowing funds, and Labour earns Wage (C). Due to the improper allocation of Rent, Wage, and Interest among Land, Labour, and Capital, this choice is incorrect.

The incorrect option is 4 (A-i; B-iii; C-ii; D-iv): This option is flawed because it repeats the error of linking Labour (i) to Profit (A), when the return for Labour must be Wage (C). Additionally, it matches Land (ii) with Wage (C) and Capital (iii) with Rent (B). Land's return is Rent (B) and Capital's return is Interest (D). The return for Labour is Wage (C), and the return for Entrepreneurship is Profit (A). Since multiple returns are assigned to the wrong factors, specifically misallocating Profit, Wage, and Rent, this option does not represent the accepted structure of factor returns in Economics.