Factors of Production and Their Theories
Economics · 50 practice questions
Types, features and rewards of the factors of production; determination of wages, interest and profits; the marginal productivity theory of wages and the liquidity preference theory; factor mobility and efficiency; unemployment and its solutions.
- Identify the types, features and rewards of factors of production.
- Analyse the determination of wages, interest and profits.
- Interpret the marginal productivity and liquidity preference theories.
- Examine the types and causes of unemployment in Nigeria and suggest solutions.
Try a few questions
- Practice question 1
A key criticism of the marginal productivity theory of wages is that it
- A.perfectly predicts wages in every real-world labour market
- B.ignores the existence of labour altogether
- C.assumes perfect competition in labour markets, which rarely holds in reality
- D.applies only to the reward for land, not labour
Show the answer
C. assumes perfect competition in labour markets, which rarely holds in reality
The theory's strict competitive assumptions limit its real-world accuracy.
- Practice question 2
A firm employs 15 workers, each paid ₦38,000 per month. The total monthly wage bill is
- A.₦38,000
- B.₦53,000
- C.₦380,000
- D.₦570,000
Show the answer
D. ₦570,000
Wage bill = 15 × 38,000 = 570,000.
- Practice question 3
Factor mobility refers to the
- A.total number of factors of production available
- B.fixed reward paid to a factor of production
- C.ease with which a factor of production can move between uses, occupations or locations
- D.inability of any factor to ever move
Show the answer
C. ease with which a factor of production can move between uses, occupations or locations
Mobility describes how freely a factor can be reallocated.
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