Test: Factors of Production and their Theories - JAMB MCQ

Factors of production refer to the resources used in the production process, such as labor, capital, land, and entrepreneurship. Demand, on the other hand, represents the quantity of goods or services that consumers are willing and able to buy at a given price.

Land as a factor of production refers to natural resources such as water bodies, minerals, and arable land. Unlike labor, capital, and entrepreneurship, which can be increased or decreased, the supply of land is limited and fixed in the short run.

Wages represent the compensation or payment received by individuals for their labor or work input in the production process. It is the reward for the physical or mental effort exerted by workers.

The marginal productivity theory of wages posits that wages are determined by the demand for and supply of labor in the market. If the demand for labor is high relative to its supply, wages tend to increase, and vice versa.

The liquidity preference theory, proposed by John Maynard Keynes, suggests that interest rates are determined by the demand for and supply of money. When the demand for money exceeds its supply, interest rates tend to rise, and vice versa.

Factor mobility refers to the ability of factors of production, such as labor, capital, and entrepreneurship, to move between different uses or locations. A worker changing jobs exemplifies the mobility of labor as a factor of production.

Efficiency in factor utilization can be enhanced through technological advancements that improve productivity, streamline production processes, and enable better allocation of resources. Technological advancements lead to higher output with the same or fewer inputs, contributing to efficiency.

Frictional unemployment arises when workers are in the process of searching for new employment opportunities or transitioning between jobs. It is a type of unemployment that is considered temporary and occurs even when the economy is functioning well.

Structural unemployment occurs when there is a mismatch between the skills or qualifications of workers and the requirements of available jobs due to changes in the structure of the economy. Technological advancements often lead to changes in industries and job requirements, resulting in structural unemployment.

Reducing government expenditure is not directly related to solving unemployment. However, increasing investment in infrastructure, encouraging entrepreneurship, and improving the education system can contribute to reducing unemployment by stimulating economic growth, creating job opportunities, and enhancing human capital development.