Which of the following is a reward to a factor of production?
Answer Details
Interest is a reward to a factor of production. It is the payment made by a borrower of funds to the owner of the funds, usually in return for the use of those funds over a period of time. In the context of factors of production, interest is a reward to capital, which is one of the four factors of production (the others being land, labor, and entrepreneurship). When capital is used to produce goods and services, it earns interest as a reward for its contribution to the production process.