Factors of Production — Quiz

Q1. Technology a is called 'facilitator and a crucial factor'. Which option BEST explains why the chapter does NOT list technology as a fifth factor of production?

• A. Technology is too modern to be called a factor.
• B. Technology is the same thing as capital and is already counted under capital.
• C. Technology only matters in service businesses, not manufacturing.
• D. Technology helps businesses produce more goods with the same or fewer inputs — it enables the other four, rather than being a separate input itself.

Q2. Ravi reads that 'businesses combine various inputs or factors of production to create goods and services'. Which conclusion follows BEST from this statement?

• A. A business needs only one factor of production at a time.
• B. Only large factories qualify as businesses; small shops do not.
• C. Goods and services arise only when several factors are brought together by a business.
• D. Services do not require any factors of production, only goods do.

Q3. Priya argues that since 'land' in economics is just the plot a factory stands on, sunlight cannot be a factor of production. Why is her reasoning WRONG, as per?

• A. Sunlight is actually a form of capital, not land.
• B. Sunlight is labour because workers use it.
• C. Only natural resources sold in shops count as land.
• D. In economics, 'land' includes not just geographical area but also natural resources such as soil, forests, water, air, sunlight, minerals, oil and natural gas.

Q4. Producers should use natural resources 'responsibly — so that we can meet our needs today without making it harder for future generations to meet theirs'. This idea is BEST described as

• A. Maximising profit by using cheap resources
• B. Replacing all natural resources with machines
• C. Using imported resources instead of local ones
• D. Sustainable use of resources

Q5. Education enriches knowledge to solve real problems while training gives hands-on practice. Why does the chapter call BOTH 'facilitators of human capital'?

• A. Because they together raise the quality and efficiency of labour — turning basic effort into specialised skill and expertise
• B. Because they both give wages to workers
• C. Because they replace the need for healthcare and good food
• D. Because they make machines unnecessary in production

Q6. Aarti reads that 'good health supports cognitive development'. Which of the following is the BEST reason healthcare is listed as a facilitator of human capital?

• A. Healthy workers earn higher wages by law.
• B. Healthcare directly produces machinery and tools.
• C. Healthcare reduces the need for education and training.
• D. Healthy children attend school regularly and learn better, and healthy workers can do more in shorter time and stay away from work less.

Q7. 'According to the Economic Survey of India 2024, 65 per cent of people in India are below the age of 35.' Why does the chapter say this MAY help India reap a 'demographic dividend'?

• A. Because young people pay more taxes than older people.
• B. Because young people automatically have higher human capital than older people.
• C. Because a large number of young, working people means more earning and fewer dependents, allowing businesses to grow and living standards to improve.
• D. Because the government pays a dividend to citizens below 35 years of age.

Q8. 'Let's Explore' notes that the stitched shipbuilding technique 'saw a severe decline after the arrival of Europeans in the Indian Ocean in the 16th century'. What does this BEST illustrate about traditional skill heritage?

• A. Indigenous techniques that were once part of India's skill heritage can decline when newer techniques take over, which is why the chapter asks why this happened.
• B. Indian stitched ships were technically inferior to European ships from the start.
• C. Stitched ships were never used for trade across the Indian Ocean.
• D. Europeans banned stitched shipbuilding by law in the 16th century.

Q9. When someone starts a business, 'personal savings, family, and friends are the first source of funds and support'. Ratna had to take a bank loan only after this — what does this sequence BEST suggest?

• A. Bank loans are illegal for new businesses.
• B. Banks are the only source of capital for any business.
• C. Family and friends always charge interest like banks do.
• D. Personal savings and informal sources are typically used first; banks come in when those funds are insufficient.

Q10. Priya reads the margin definitions and compares 'interest' and 'dividend'. Which option BEST captures the difference the chapter draws between the two?

• A. Both are paid by banks to their customers on deposits.
• B. Interest is paid by shareholders to the company; dividend is paid by banks to borrowers.
• C. Interest is paid by a borrower to a lender for using their money; dividend is paid regularly by a company to its shareholders out of its profits.
• D. Both mean the same thing in economics.

Q11. Ravi opens a small bakery in Patna. He arranges a shop on rent, hires two trained bakers, buys an oven and ingredients, and decides what to bake each day. Based on Fig. 7.16, which entrepreneur task is he MOST clearly performing when he brings the shop, bakers and oven together?

• A. Identifying a problem and finding an innovative solution
• B. Taking risks by investing money and time
• C. Combining various factors of production
• D. Contributing to the welfare of society

Q12. (margin) defines a 'startup'. Which option BEST matches that definition?

• A. Any old, well-established large company
• B. A government department that provides public services
• C. A bank that lends money to other businesses
• D. An entrepreneurial venture with limited resources that aims at rapid growth and expansion while leveraging technology

Q13. Agriculture, construction and handicraft sectors are 'labour-intensive', while semiconductor chips or satellites are 'capital-intensive'. Why does the chapter draw this distinction?

• A. Because the proportion of each factor used depends on the product — some products rely more on labour, others on specialised machinery and capital.
• B. Because labour-intensive sectors do not need any capital at all.
• C. Because capital-intensive sectors do not need any workers.
• D. Because handicraft and agriculture are not real production sectors.

Q14. Production halted during COVID-19 because supply chains depended on far-off sources instead of local inputs. If Priya's mobile-phone factory in Noida relies on chips imported from one country and that country shuts borders, which outcome does the chapter MOST clearly predict?

• A. Production at the Noida factory will continue without any change.
• B. The price of land in Noida will fall immediately.
• C. Workers will become more skilled overnight.
• D. The factory's production process will face a halt, similar to the COVID-19 example, because of supply chain disruption.

Q15. SWAYAM (Study Webs of Active Learning for Young Aspiring Minds). Why does the chapter use SWAYAM is described as an example when explaining technology as an enabler of production?

• A. Because SWAYAM is a stock market platform.
• B. Because SWAYAM is a CSR programme run by private companies.
• C. Because SWAYAM trains farmers in the use of drones.
• D. Because SWAYAM offers free online courses from Grade 9 onwards, helping students build skills from anywhere and at their own pace — showing how technology develops human capital.