Question

In how many categories are the factors of production broadly divided?

• A. 2
• B. 3
• C. 4
• D. 5

Hint:

Use the acronym CELL (Capital, Entrepreneurship, Land, Labor) to remember the four factors of production.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Factors of production are the inputs or resources used to create goods and services.

Step 2: Detailed Explanation:
Classical and neoclassical economics broadly divide the factors of production into four main categories: \begin{enumerate} \item Land: All natural resources. \item Labor: Human effort. \item Capital: Man-made goods used in further production (e.g., machinery, tools). \item Entrepreneurship: The skill of combining the other three factors to produce goods and services and take risks. \end{enumerate}

Step 3: Final Answer:
The factors of production are broadly divided into four categories. Thus, option (C) is the correct answer.