100 Objective Questions and Answers: Factors of Production

Welcome to this comprehensive Economics objective question bank on Factors of Production. This resource covers the meaning and types of production, the four factors of production (land, labour, capital, and entrepreneur), their characteristics, importance, rewards, and related concepts such as wealth, poverty, and capital formation. These 100 objective questions are designed for students preparing for SSCE, NECO, NABTEB, UTME, and university examinations. Each question is followed by the correct answer, making it ideal for revision and self-assessment.

Section A: Definition and Types of Production (Questions 1–20)

1. Production in Economics can be defined as the?
A. Totality of producing, buying and consuming
B. Transformation of raw materials and services in order to provide ultimate utility
C. Transformation of raw materials and services in order to make maximum profit
D. Production of goods and services for consumption

Answer: D

2. What best defines the term production?
A. Creation of utility yielding goods and services for human use
B. Conversion of raw materials into finished goods
C. Creation of goods for human consumption
D. Delivery of finished goods to consumers
E. Rendering of services to customers

Answer: A

3. Production covers all but one of the following activities?
A. Changing the position of a good in time
B. The provision of some kind of service
C. Changing the form of a good from raw materials to finished product
D. Changing the situation of a good from one place to another
E. The use of goods and services to satisfy individual wants

Answer: E

4. Production in economics occurs when?
A. A commodity or service is sold
B. Utility is created or added
C. A commodity is manufactured
D. Raw materials are produced or extracted from mines
E. All of these

Answer: B

5. The act of combining factor inputs in order to obtain specific output is known as?
A. Factor procurement
B. Manufacturing
C. Investment
D. Industrialization
E. Production

Answer: E

6. Methods of production can be broadly classified as ______ and ______ methods.
A. Capital, labour intensive
B. Capitalist, socialist
C. Industrial, agricultural
D. Crude, mechanized
E. Direct, indirect

Answer: E

7. Direct production is characterized by?
A. High standard of living
B. Production for exchange
C. Production for personal and family needs
D. Use of advanced machinery
E. Large-scale production

Answer: C

8. Indirect production involves?
A. Production for personal consumption only
B. Production of goods and services which are later exchanged for money
C. Barter trade only
D. Subsistence farming
E. Family labour only

Answer: B

9. The three stages of indirect production are?
A. Primary, secondary, tertiary
B. Direct, indirect, mixed
C. Agricultural, industrial, service
D. Extraction, manufacturing, distribution
E. Farming, mining, construction

Answer: A

10. Primary production is also referred to as?
A. Manufacturing industry
B. Extractive industry
C. Construction industry
D. Service industry
E. Processing industry

Answer: B

11. The type of production which involves mining is called?
A. Primary production
B. Indirect production
C. Secondary production
D. Tertiary production

Answer: A

12. Which of the following belongs to the primary stage of production?
A. Producing soft drinks
B. Driving a cab
C. Drilling for crude oil
D. Road construction
E. Banking

Answer: C

13. Secondary production entails?
A. Tapping and harnessing of natural resources
B. Processing of primary products into finished goods
C. Provision of commercial and professional services
D. Extraction of raw materials
E. Fishing and hunting

Answer: B

14. Secondary production is divided into?
A. Mining and quarrying
B. Manufacturing and construction
C. Agriculture and fishing
D. Wholesale and retail
E. Banking and insurance

Answer: B

15. Tertiary production covers?
A. Commercial and professional services
B. Extraction of raw materials
C. Processing of raw materials
D. Manufacturing of goods
E. Construction of roads

Answer: A

16. Which of the following is a tertiary production activity?
A. Farming
B. Oil refining
C. Banking
D. Construction
E. Mining

Answer: C

17. Production is said not to be complete until?
A. Goods are manufactured
B. Goods reach the wholesalers
C. Goods reach the final consumers
D. Goods are stored in warehouses
E. Goods are exported

Answer: C

18. The main purpose of production is?
A. Profit maximization
B. Consumption
C. Exchange
D. Storage
E. Distribution

Answer: B

19. Utility is defined as?
A. The satisfaction derived from the use of a product
B. The cost of producing a product
C. The price of a product
D. The quantity of a product
E. The durability of a product

Answer: A

20. Production involves the creation of?
A. Scarcity
B. Utility
C. Inflation
D. Unemployment
E. Money

Answer: B

Section B: Factors of Production – Land (Questions 21–35)

21. The factors of production are?
A. Land, labour, capital, entrepreneur
B. Land, money, labour, capital
C. Labour, capital, money, entrepreneur
D. Land, labour, money, entrepreneur
E. Capital, labour, money, land

Answer: A

22. Land in economics is defined as?
A. The surface of the earth only
B. Various non-human natural resources found anywhere on the earth
C. Man-made resources
D. Human effort
E. Financial assets

Answer: B

23. Which of the following is NOT a characteristic of land?
A. It is a free gift of nature
B. It is limited or fixed in supply
C. It is geographically mobile
D. It is heterogeneous
E. It is subject to the law of diminishing returns

Answer: C

24. The reward for land as a factor of production is?
A. Wage
B. Interest
C. Rent
D. Profit
E. Salary

Answer: C

25. Land is said to be geographically immobile because?
A. It cannot be moved from one place to another
B. It can be moved easily
C. It is man-made
D. It is unlimited in supply
E. It is homogeneous

Answer: A

26. Which of the following is an importance of land?
A. It provides the surface on which economic activities take place
B. It provides the source for raw materials
C. It provides site for residential and industrial building
D. All of the above
E. None of the above

Answer: D

27. Land is subject to the law of?
A. Increasing returns
B. Diminishing returns
C. Constant returns
D. Variable returns
E. Zero returns

Answer: B

28. Land is heterogeneous means?
A. It is the same everywhere
B. It varies in quality and value from one place to another
C. It is man-made
D. It is unlimited
E. It is mobile

Answer: B

29. Which of the following is a free gift of nature?
A. Capital
B. Labour
C. Land
D. Entrepreneur
E. Money

Answer: C

30. Land is fixed in supply because?
A. Its quantity cannot be increased
B. It can be manufactured
C. It is unlimited
D. It is mobile
E. It is man-made

Answer: A

31. The reward for the use of land in production is called?
A. Profit
B. Rent
C. Wage
D. Interest
E. Salary

Answer: B

32. Which of the following is NOT a natural resource?
A. Rivers
B. Forests
C. Machinery
D. Mineral deposits
E. Oceans

Answer: C

33. Land provides the source for?
A. Food supply
B. Raw materials
C. Minerals
D. All of the above
E. None of the above

Answer: D

34. The quality of land varies from one place to another. This is known as?
A. Homogeneity
B. Heterogeneity
C. Mobility
D. Scarcity
E. Utility

Answer: B

35. Land is subject to wear and tear through?
A. Excessive usage or erosion
B. Manufacturing
C. Construction
D. Transportation
E. Communication

Answer: A

Section C: Labour (Questions 36–55)

36. Labour is defined as?
A. Human effort of any kind directed towards production
B. Man-made resources
C. Natural resources
D. Financial assets
E. Machines and equipment

Answer: A

37. The reward for labour is?
A. Rent
B. Interest
C. Wage or salary
D. Profit
E. Dividend

Answer: C

38. Skilled labour requires?
A. No training
B. A long period of training
C. A shorter period of training
D. Only physical strength
E. No education

Answer: B

39. Which of the following is an example of skilled labour?
A. Messenger
B. Gardener
C. Lawyer
D. Cleaner
E. Janitor

Answer: C

40. Semi-skilled labour requires?
A. No training
B. A shorter period of training
C. A very long period of training
D. Only mental effort
E. No education

Answer: B

41. Which of the following is an example of semi-skilled labour?
A. Doctor
B. Carpenter
C. Pilot
D. Engineer
E. Accountant

Answer: B

42. Unskilled labour requires?
A. No form of training
B. Long training
C. Technical education
D. University degree
E. Professional certification

Answer: A

43. Which of the following is an example of unskilled labour?
A. Teacher
B. Journalist
C. Gardener
D. Lawyer
E. Pilot

Answer: C

44. Efficiency of labour means?
A. The productive capacity of a worker to do more or better work
B. The number of workers employed
C. The total population of a country
D. The amount of capital available
E. The level of technology

Answer: A

45. Which of the following is a characteristic of labour?
A. It is geographically and occupationally mobile
B. It is fixed in supply
C. It is man-made
D. It is a free gift of nature
E. It is homogeneous

Answer: A

46. Labour is perishable means?
A. It can be stored for future use
B. It cannot be stored; unused labour is lost forever
C. It can be transferred
D. It is durable
E. It is man-made

Answer: B

47. Labour is heterogeneous means?
A. All workers are the same
B. No two persons possess the same quality of labour
C. Labour is man-made
D. Labour is fixed in supply
E. Labour is a free gift of nature

Answer: B

48. Which of the following is a factor influencing the efficiency of labour?
A. General and technical education
B. Personnel incentives and rewards
C. Experience
D. All of the above
E. None of the above

Answer: D

49. Hot and enervating climate is a cause of?
A. High efficiency of labour
B. Low efficiency of labour
C. Increased productivity
D. Improved standard of living
E. Economic growth

Answer: B

50. The total period of work per day should not be more than?
A. Four hours
B. Six hours
C. Eight hours
D. Ten hours
E. Twelve hours

Answer: C

51. Which of the following is NOT a cause of low efficiency of labour?
A. Low wages
B. Inadequate machinery and equipment
C. Uncongenial factory environment
D. Adequate training
E. Inefficient management

Answer: D

52. Labour is a human capital because?
A. Investment in education and health improves efficiency
B. It is man-made
C. It is a free gift of nature
D. It is fixed in supply
E. It is homogeneous

Answer: A

53. Labour influences other factors of production?
A. Passively
B. Actively
C. Not at all
D. Negatively
E. Marginally

Answer: B

54. The quality of labour has to do with?
A. The total supply of labour
B. The efficiency of labour
C. The number of workers
D. The age of workers
E. The gender of workers

Answer: B

55. Which of the following is an importance of labour?
A. It provides manpower for production
B. It controls other factors of production
C. It is needed to operate machines
D. All of the above
E. None of the above

Answer: D

Section D: Capital (Questions 56–70)

56. Capital is defined as?
A. Man-made resources produced to aid production
B. Natural resources
C. Human effort
D. Free gift of nature
E. Consumer goods

Answer: A

57. The reward for capital is?
A. Rent
B. Wage
C. Interest
D. Profit
E. Salary

Answer: C

58. Which of the following is a characteristic of capital?
A. It is man-made
B. It takes different forms
C. It can be stored for future use
D. All of the above
E. None of the above

Answer: D

59. Capital that is not used up in the course of production is called?
A. Circulating capital
B. Working capital
C. Fixed capital
D. Social capital
E. Liquid capital

Answer: C

60. Which of the following is an example of fixed capital?
A. Raw materials
B. Cash
C. Machinery
D. Fuel
E. Money

Answer: C

61. Circulating capital is also known as?
A. Fixed capital
B. Working capital
C. Social capital
D. Durable capital
E. Real capital

Answer: B

62. Which of the following is an example of circulating capital?
A. Buildings
B. Machinery
C. Raw materials
D. Vehicles
E. Tools

Answer: C

63. Social capital refers to?
A. Infrastructure provided by the government
B. Private business assets
C. Personal belongings
D. Raw materials
E. Cash in hand

Answer: A

64. Which of the following is an example of social capital?
A. Factory building
B. Road
C. Personal car
D. Raw materials
E. Machinery

Answer: B

65. Capital facilitates production by?
A. Providing raw materials and other things needed for production
B. Increasing scarcity
C. Reducing efficiency
D. Decreasing standard of living
E. Limiting division of labour

Answer: A

66. Capital improves the standard of living by?
A. Increasing purchasing power
B. Decreasing productivity
C. Reducing income
D. Limiting choices
E. Increasing unemployment

Answer: A

67. Capital increases the efficiency of other factors of production.
A. True
B. False
C. Sometimes
D. Never
E. Not applicable

Answer: A

68. Which of the following is NOT a type of capital?
A. Fixed capital
B. Circulating capital
C. Social capital
D. Personal capital
E. Working capital

Answer: D

69. Capital that is used up in the process of production is called?
A. Fixed capital
B. Circulating capital
C. Social capital
D. Durable capital
E. Real capital

Answer: B

70. Capital decreases with time due to?
A. Wear and tear
B. Appreciation
C. Inflation
D. Deflation
E. Investment

Answer: A

Section E: Wealth and Poverty (Questions 71–85)

71. Wealth is defined as?
A. The total stock of goods and skills owned at a particular point in time
B. The income earned in a year
C. The money in circulation
D. The total production of goods
E. The total consumption of goods

Answer: A

72. Which of the following is a quality of wealth?
A. It must be limited in supply
B. It must have money value
C. It must possess utility
D. All of the above
E. None of the above

Answer: D

73. Personal wealth includes?
A. Clothes, furniture, jewelry
B. Factory buildings
C. Town hall
D. Roads
E. Public libraries

Answer: A

74. Business wealth is also referred to as?
A. Personal wealth
B. Producers’ wealth
C. Community wealth
D. Social wealth
E. National wealth

Answer: B

75. Community wealth includes?
A. Town hall, markets
B. Personal cars
C. Factory buildings
D. Raw materials
E. Machinery

Answer: A

76. Social wealth refers to?
A. The wealth of a nation collectively owned by its citizens
B. Personal belongings
C. Business assets
D. Community property
E. Family property

Answer: A

77. Poverty is defined as?
A. A state in which a person lacks adequate resources for a minimum standard of living
B. The accumulation of wealth
C. High income level
D. Abundance of resources
E. Economic growth

Answer: A

78. Absolute poverty is also known as?
A. Relative poverty
B. Extreme or abject poverty
C. Moderate poverty
D. Temporary poverty
E. Cyclical poverty

Answer: B

79. Absolute poverty involves scarcity of?
A. Basic food, clean water, health, shelter, education
B. Luxuries
C. Vacation homes
D. Private jets
E. Designer clothes

Answer: A

80. Relative poverty is defined from?
A. A social perspective comparing living standards
B. An absolute threshold
C. A biological perspective
D. A political perspective
E. A cultural perspective

Answer: A

81. Relative poverty is a measure of?
A. Income inequality
B. Absolute deprivation
C. Basic needs satisfaction
D. Caloric intake
E. Life expectancy

Answer: A

82. All capital is wealth, but not all wealth is capital because?
A. Some forms of wealth do not assist production
B. All wealth is capital
C. Capital is not wealth
D. Wealth is man-made
E. Capital is natural

Answer: A

83. Which of the following is NOT a quality of wealth?
A. Limited in supply
B. Money value
C. Utility
D. Unlimited in supply
E. Marketable

Answer: D

84. The wealth of a nation collectively owned by its citizens is called?
A. Personal wealth
B. Business wealth
C. Community wealth
D. Social wealth
E. Private wealth

Answer: D

85. Poverty is actually the lack of?
A. Wealth
B. Capital
C. Labour
D. Land
E. Entrepreneur

Answer: A

Section F: Capital Formation and Miscellaneous (Questions 86–100)

86. Capital formation means?
A. Increasing the stock of real capital in a country
B. Decreasing the stock of capital
C. Consuming all capital goods
D. Exporting capital goods
E. Importing consumer goods

Answer: A

87. The most important means of capital formation is?
A. Waiting
B. Consuming
C. Spending
D. Importing
E. Exporting

Answer: A

88. Capital formation depends on?
A. Saving
B. Consumption
C. Inflation
D. Deflation
E. Unemployment

Answer: A

89. Saving involves?
A. Forgoing some present consumer goods
B. Consuming all goods
C. Spending all income
D. Borrowing money
E. Importing goods

Answer: A

90. The production of capital goods or additions to capital for the purpose of production is known as?
A. Investment
B. Consumption
C. Saving
D. Waiting
E. Depreciation

Answer: A

91. Which of the following is an example of capital?
A. Machinery
B. Food
C. Clothing
D. Shelter
E. Entertainment

Answer: A

92. The reward for entrepreneur is?
A. Rent
B. Wage
C. Interest
D. Profit
E. Salary

Answer: D

93. The entrepreneur is responsible for?
A. Organizing other factors of production
B. Providing land
C. Providing labour
D. Providing capital
E. Providing natural resources

Answer: A

94. Which of the following is NOT a factor of production?
A. Land
B. Labour
C. Capital
D. Money
E. Entrepreneur

Answer: D

95. The reward for land is rent, labour is wage, capital is interest, and entrepreneur is?
A. Profit
B. Rent
C. Wage
D. Interest
E. Salary

Answer: A

96. Which of the following is a characteristic of land?
A. It is a free gift of nature
B. It is man-made
C. It is geographically mobile
D. It is unlimited in supply
E. It is homogeneous

Answer: A

97. Which of the following is a characteristic of labour?
A. It is perishable
B. It is man-made
C. It is fixed in supply
D. It is a free gift of nature
E. It is homogeneous

Answer: A

98. Which of the following is a characteristic of capital?
A. It is man-made
B. It is a free gift of nature
C. It is geographically immobile
D. It is fixed in supply
E. It is homogeneous

Answer: A

99. The factor of production that coordinates other factors is?
A. Land
B. Labour
C. Capital
D. Entrepreneur
E. Money

Answer: D

100. Production is complete when goods reach the?
A. Wholesaler
B. Retailer
C. Final consumer
D. Manufacturer
E. Exporter

Answer: C

Answer Key Summary

Conclusion

This comprehensive objective question bank on Factors of Production covers the meaning and types of production, land, labour, capital, entrepreneur, wealth, poverty, and capital formation. Students preparing for SSCE, NECO, NABTEB, UTME, and university examinations will find these 100 questions invaluable for revision and self-assessment. Master these questions to build a strong foundation in the factors of production and excel in your examinations.