Question

Give reasons or explain:

1. The entrepreneur is called a leader of the organization.

2. Labour cannot be stored.

3. The supply of land is inelastic.

4. Raw material is considered as a variable capital.

Answer 1

1. An entrepreneur is a person who undertakes the task of production. He organises tasks, controls the activities related to production and distribution, and also bears the risk of failure of the business. Thus, an entrepreneur is regarded as a leader of the organisation.

2. Labour refers to the people who actually use the land and capital to produce goods. It is the exertion by the human body and mind, with the objective of earning a living. Since we cannot store the mental and physical efforts, we can conclude that labour cannot be stored and used in the future.

3. The supply of land is inelastic which means that it is less responsive to the changes in its price. This is because of its limited availability. Thus, even when the price of the land increases, its supply cannot be increased.

4. 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. Since the demand for raw materials changes overtime, and it is used in the process of production only once, it can be considered as a variable capital.