Question

Define or explain the following concepts:

1. Entrepreneur

2. Variable capital

3. Labour

4. Land

5. Capital

Answer 1

1. Entrepreneur is the person who undertakes the task of production. He organises the various activities, controls the activities related to production and distribution, and also bears the risk of failure of the business. He sells the output in the market and remunerates the factors. For his dare in undertaking the risk of production, he receives profits in return.

2. Variable capital refers to the capital whose demand changes over time. In other words, it refers to
the capital that is used in the process of production only once. For instance, raw material, fuel,
power, wages etc.

3. Labour refers to the people who actually use the land and capital to produce goods. It includes all physical and mental efforts of workers, employees, managers etc. In other words, the exertion by the human body and mind, with the objective of earning a living, is known as labour.

4. In economics, land does not merely imply soil. In fact, it broadly refers to all natural resources, flora and fauna, earth, buildings, avenues, air, water, minerals etc. The owner of the land (the landlord) receives rent in exchange for his contribution to the production process.

5. Capital includes money invested in the business, machinery and tools. A moneylender or a capital owner receives interest on the amount of capital contributed by him in the production. It is regarded as an artificial factor of production. This is because it cannot produce goods on its own.