Test: Factors of Production - Class 10 MCQ

Time utility is created by storing surplus goods and supplying them when they are in demand. For instance, organizations like the Food Corporation of India store food grains to ensure availability during periods of low supply. This practice helps stabilize prices and guarantees that consumers have access to essential goods when needed.

The health and standard of living of workers significantly affect their efficiency. Improved health, often linked to better nutrition and living conditions, enables workers to perform tasks more effectively and learn new skills, directly enhancing overall productivity in the labor force.

Form utility involves transforming a product into a more useful form for consumers. For example, when raw materials like wood are crafted into furniture, the resulting product (the chair) has a higher utility because it meets consumer needs more effectively than the raw material alone. This concept highlights the importance of production processes in creating value.

Mobility of capital refers to the ease with which capital can be transferred from one location or occupation to another. This characteristic allows businesses to adapt quickly to changing market conditions, invest in new opportunities, and optimize their operations for greater efficiency and profitability.

Circulating capital includes resources that are used up quickly in the production process, such as raw materials and components. Unlike fixed capital, which remains for long-term use, circulating capital is essential for ongoing production activities and is replenished frequently.

Labour is considered indivisible because it cannot be separated from the individual performing the work. Unlike capital or land, which can be owned separately from their producers, a laborer's effort is intrinsically tied to their identity, making it unique among the factors of production.

The law of diminishing marginal returns states that as more of a variable input (like labor or capital) is added to a fixed input (such as land), the additional output produced will eventually decrease. This principle emphasizes the importance of balancing input levels to maintain productivity.

Land is the factor of production that encompasses all natural resources, such as minerals, water, and forests. It provides the foundation for economic activities, making it essential for production. Without land, the other factors cannot function effectively as they rely on natural resources to produce goods.

Land is characterized by its immobility, meaning it cannot be relocated from one place to another, unlike labor or capital. The fixed nature of land, combined with its various uses and fertility differences, significantly impacts economic activities and production capabilities.

Entrepreneurs are vital in organizing and managing the production process. They take on risks, make strategic decisions, and innovate, ensuring that land, labor, and capital work together effectively. Their leadership is crucial for driving economic growth and adapting to market changes.

Derived demand refers to the demand for a factor of production that arises due to the demand for the final goods it helps produce. For example, if there is a high demand for cars, the demand for labor and capital to manufacture those cars will also increase, as they are essential for production.

Fixed capital refers to long-term assets such as machinery and buildings that are used over an extended period in the production process. These assets are crucial for efficient production but are not easily converted into cash, differentiating them from circulating capital, which is consumed quickly.

Capital is defined as the means of production that humans create, distinguishing it from natural resources. It includes machinery, buildings, and tools that enhance productivity. Unlike other factors, capital is produced through human effort and investment, making it essential for efficient production processes.

A major challenge to capital formation in India is the inability of a significant portion of the population to save due to poverty. Low savings rates hinder the mobilization of funds necessary for investment in productive activities, impacting overall economic growth and development.

Time utility is significant in economic production as it ensures that goods are available to consumers when they are needed, regardless of when they were produced. This aspect of utility helps stabilize market prices and ensures that supply meets demand, contributing to overall economic efficiency.

Geographical mobility of labor allows workers to move from one location to another, facilitating the deployment of labor where it is most needed. This mobility enhances labor efficiency by ensuring that skills are utilized effectively, thereby improving overall productivity and economic output.

Maintaining a proper land-man ratio is crucial for enhancing land productivity. An optimal balance ensures that the available land is used efficiently, preventing overexploitation and allowing for sustainable agricultural practices, which are vital for food security and economic stability.

The supply of labor is influenced by the age structure of the population, as only individuals within the legally defined working age are considered part of the labor force. This means that demographic trends, such as an aging population or youth bulge, can significantly impact the overall labor supply available in the market.

Division of labor allows workers to specialize in specific tasks, leading to greater expertise and higher efficiency. This specialization reduces the time and effort required to complete tasks, ultimately boosting overall productivity and lowering production costs, benefiting both producers and consumers.

Entrepreneurs play a crucial role in economic development by introducing innovations that can lower costs or create new market demands. Their willingness to take risks and invest in new ideas drives industrial production and job creation, contributing to overall economic growth and self-sufficiency.