CHAPTER 7: FACTORS OF PRODUCTION
Q1. What are the resources or inputs used to produce goods and services called?
A. Consumer goods
B. Factors of production
C. Natural disasters
D. Public facilities
Answer: B. Factors of production
Q2. Which of the following is an example of a business?
A. A shop that sells goods
B. A river flowing through a forest
C. An empty field
D. An unused mountain
Answer: A. A shop that sells goods
Q3. Which four factors of production are identified in the chapter?
A. Education, health, trade and transport
B. Money, markets, consumers and taxes
C. Land, labour, capital and entrepreneurship
D. Agriculture, industry, services and technology
Answer: C. Land, labour, capital and entrepreneurship
Q4. What role does technology play in production?
A. It eliminates the need for every resource.
B. It replaces all forms of human effort.
C. It prevents businesses from producing goods.
D. It helps businesses produce more goods with the same or fewer inputs.
Answer: D. It helps businesses produce more goods with the same or fewer inputs.
Q5. In economics, what does the term ‘land’ include?
A. Only buildings and factories
B. Geographical land and natural resources
C. Only agricultural fields
D. Only roads and transport facilities
Answer: B. Geographical land and natural resources
Q6. Which of the following is considered a natural resource under the factor of land?
A. Computer
B. Tractor
C. Sunlight
D. Factory building
Answer: C. Sunlight
Q7. How can a business obtain the use of land?
A. By purchasing it or paying rent
B. Only by receiving it free of cost
C. Only by borrowing it from workers
D. By exchanging it for labour in every case
Answer: A. By purchasing it or paying rent
Q8. What does labour refer to in the production process?
A. Only the money invested in a business
B. Only the machines used in a factory
C. Only the natural resources used in production
D. The physical and mental effort used in production
Answer: D. The physical and mental effort used in production
Q9. Which of the following is an example of labour?
A. A mineral deposit
B. A carpenter making furniture
C. A factory building
D. A bank loan
Answer: B. A carpenter making furniture
Q10. What is a skill?
A. The amount of money saved by a business
B. A natural resource found underground
C. The ability to perform an activity or job well through practice and training
D. A machine used to manufacture goods
Answer: C. The ability to perform an activity or job well through practice and training
Q11. What is meant by human capital?
A. The specialised skills, knowledge, abilities and expertise of people
B. The total land owned by a company
C. The money kept in a bank
D. The machines installed in a factory
Answer: A. The specialised skills, knowledge, abilities and expertise of people
Q12. How is human capital different from labour?
A. Labour includes only machines, while human capital includes land.
B. Human capital refers only to money invested in a business.
C. Labour and human capital have exactly the same meaning.
D. Labour refers to physical and mental effort, while human capital refers to the quality of that labour through knowledge and skills.
Answer: D. Labour refers to physical and mental effort, while human capital refers to the quality of that labour through knowledge and skills.
Q13. Which of the following is an example of a person using specialised knowledge in production?
A. A tree growing in a forest
B. A chemical engineer applying scientific knowledge
C. An unused piece of land
D. A river flowing through a valley
Answer: B. A chemical engineer applying scientific knowledge
Q14. Which of the following is an important facilitator of human capital?
A. Waste generation
B. Resource depletion
C. Education and training
D. Unemployment alone
Answer: C. Education and training
Q15. How does education contribute to human capital?
A. It helps people gain knowledge, from basic literacy to specialised expertise.
B. It removes the need for all practical skills.
C. It prevents people from learning new occupations.
D. It replaces all forms of training.
Answer: A. It helps people gain knowledge, from basic literacy to specialised expertise.
Q16. Why is practical training important for a civil engineering student?
A. It removes the need to understand building materials.
B. It ensures that every construction project costs nothing.
C. It makes safety procedures unnecessary.
D. It helps the student apply knowledge through observation, testing and hands-on experience.
Answer: D. It helps the student apply knowledge through observation, testing and hands-on experience.
Q17. How does good health support human capital?
A. It reduces the need for education in every occupation.
B. It helps people learn better and work more effectively.
C. It prevents workers from developing skills.
D. It eliminates the need for healthcare facilities.
Answer: B. It helps people learn better and work more effectively.
Q18. Which of the following best describes cognitive development?
A. The process of purchasing machinery
B. The process of collecting taxes
C. The process of learning, knowing and understanding
D. The process of extracting minerals
Answer: C. The process of learning, knowing and understanding
Q19. What does the Japanese concept of kaizen mean?
A. Continuous improvement
B. Complete automation
C. Foreign trade
D. Natural resource conservation only
Answer: A. Continuous improvement
Q20. Since approximately when has the concept of kaizen been applied in Japan, according to the chapter?
A. Since the early 1800s
B. Since the late 1900s
C. Since the beginning of the 21st century
D. Since the mid-1940s
Answer: D. Since the mid-1940s
Q21. Which qualities are associated with the German work ethic in the chapter?
A. Avoiding responsibility and reducing quality
B. Punctuality, attention to detail and quality
C. Ignoring training and improvement
D. Depending entirely on natural resources
Answer: B. Punctuality, attention to detail and quality
Q22. According to the World Bank estimates cited in the chapter, what was India’s adult literacy rate in 2023 for males?
A. 50 per cent
B. 70 per cent
C. 85 per cent
D. 95 per cent
Answer: C. 85 per cent
Q23. According to the World Bank estimates cited in the chapter, what was India’s adult literacy rate in 2023 for females?
A. 70 per cent
B. 85 per cent
C. 90 per cent
D. 100 per cent
Answer: A. 70 per cent
Q24. What does the term ‘productivity’ mean?
A. The amount of land a business owns
B. The number of workers who leave a company
C. The money borrowed by a business
D. The ability to do more in a particular period of time
Answer: D. The ability to do more in a particular period of time
Q25. According to the Economic Survey of India 2024, approximately what percentage of India’s population was below the age of 35?
A. 35 per cent
B. 65 per cent
C. 45 per cent
D. 85 per cent
Answer: B. 65 per cent
Q26. What is a demographic dividend?
A. The benefit a country gets when it has a large number of young and working people
B. The money distributed only to retired people
C. The profit earned by a single factory
D. The income generated only from exports
Answer: A. The benefit a country gets when it has a large number of young and working people
Q27. What is needed for India to benefit from its young population?
A. Reducing access to healthcare
B. Preventing workers from learning new skills
C. Access to quality education, health, training and skilling
D. Limiting employment opportunities
Answer: C. Access to quality education, health, training and skilling
Q28. What does the chapter explain about India’s ancient skill heritage?
A. Traditional skills were never passed between generations.
B. Ancient Indians avoided using tools in production.
C. Art and knowledge had no connection with production.
D. Knowledge and skills were passed from generation to generation and developed further.
Answer: D. Knowledge and skills were passed from generation to generation and developed further.
Q29. What are the śhilpa śāstras?
A. Ancient texts containing design guidelines for sculptures, paintings, buildings and other items
B. Modern manuals for operating computers
C. Records of bank loans and interest
D. Documents describing modern stock markets
Answer: A. Ancient texts containing design guidelines for sculptures, paintings, buildings and other items
Q30. What is the significance of Viśhwakarmā pūjā or Āyudha pūjā in the chapter?
A. It marks the beginning of the stock market.
B. It reflects the tradition of worshipping tools used in work.
C. It celebrates the replacement of all traditional skills.
D. It is described as a method of collecting taxes.
Answer: B. It reflects the tradition of worshipping tools used in work.
Q31. How were wooden planks joined in the traditional stitched shipbuilding technique described in the chapter?
A. By using only iron sheets
B. By melting the wood together
C. By stitching the planks together with cords instead of nails
D. By covering the planks entirely with cement
Answer: C. By stitching the planks together with cords instead of nails
Q32. What was one advantage of the traditional stitched shipbuilding technique?
A. It eliminated the need for wooden planks.
B. It prevented ships from carrying goods.
C. It made ships suitable only for use on land.
D. It made ships flexible and helped them navigate the Indian Ocean.
Answer: D. It made ships flexible and helped them navigate the Indian Ocean.
Q33. What does capital include in economics?
A. Money and human-made assets used to produce goods and services
B. Only forests, soil and sunlight
C. Only the physical effort of workers
D. Only the profits earned after selling goods
Answer: A. Money and human-made assets used to produce goods and services
Q34. Which of the following is an example of physical capital?
A. A worker’s knowledge
B. Machinery used in a factory
C. Sunlight used by crops
D. A person’s ability to make decisions
Answer: B. Machinery used in a factory
Q35. What was one source of funds Ratna used to meet the shortfall when starting her restaurant?
A. A dividend paid by her own listed company
B. A government election fund
C. A bank loan
D. The sale of natural resources belonging to the state
Answer: C. A bank loan
Q36. What is interest on a loan?
A. The total land owned by a borrower
B. The salary paid to a worker
C. The profit earned by every shareholder
D. The amount paid by a borrower to a lender for using money over a specific period
Answer: D. The amount paid by a borrower to a lender for using money over a specific period
Q37. How can large companies raise financial capital through the stock market?
A. By offering shares of their business to the public
B. By collecting school fees
C. By renting natural resources from every citizen
D. By exchanging all machinery for labour
Answer: A. By offering shares of their business to the public
Q38. What is a dividend?
A. A payment made by a borrower to a bank as interest
B. Money a company pays to its shareholders out of its profits
C. The rent paid for agricultural land
D. The wages paid to every worker daily
Answer: B. Money a company pays to its shareholders out of its profits
Q39. What is entrepreneurship?
A. The process of consuming goods without producing anything
B. The practice of collecting natural resources without using them
C. Starting a business or creating something new to solve a problem
D. The process of working only as a government employee
Answer: C. Starting a business or creating something new to solve a problem
Q40. Which of the following is an important role of an entrepreneur?
A. Avoiding all decisions related to the business
B. Refusing to combine resources
C. Preventing new products from reaching the market
D. Taking risks, combining factors of production and making key decisions
Answer: D. Taking risks, combining factors of production and making key decisions
Q41. What is a startup, according to the chapter?
A. An entrepreneurial venture with limited resources that aims for rapid growth and expansion while leveraging technology
B. A business that cannot introduce new ideas
C. A government department responsible for collecting taxes
D. A company that uses no resources
Answer: A. An entrepreneurial venture with limited resources that aims for rapid growth and expansion while leveraging technology
Q42. Which airline was started by J.R.D. Tata in 1932?
A. Indian Airlines
B. Tata Airlines
C. Vistara
D. IndiGo
Answer: B. Tata Airlines
Q43. Which award did J.R.D. Tata receive in 1992?
A. Padma Shri
B. Padma Bhushan
C. Bharat Ratna
D. Nobel Prize
Answer: C. Bharat Ratna
Q44. What does technology mean in the context of production?
A. The process of selling goods without producing them
B. The process of collecting taxes from businesses
C. The ownership of land by a company
D. The application of scientific knowledge
Answer: D. The application of scientific knowledge
Q45. Which technology helps farmers receive advance weather updates and find suitable routes for transporting goods?
A. GPS and digital information systems
B. Traditional handwritten letters alone
C. Manual weighing scales only
D. Wooden carts without navigation tools
Answer: A. GPS and digital information systems
Q46. Which government platform offers online courses through Massive Open Online Courses (MOOCs), as described in the chapter?
A. National Career Service
B. SWAYAM
C. Election Commission of India
D. Reserve Bank of India
Answer: B. SWAYAM
Q47. What is the main purpose of the National Career Service portal mentioned in the chapter?
A. To provide loans to every business automatically
B. To regulate the prices of all goods
C. To help people find job opportunities across various sectors
D. To replace schools and universities
Answer: C. To help people find job opportunities across various sectors
Q48. Which statement best explains the relationship between the factors of production?
A. Each factor can always produce goods independently of all other factors.
B. Technology makes every other factor unnecessary.
C. Capital is needed only in agriculture.
D. The factors complement one another, and missing or misused inputs can make production inefficient or stop it.
Answer: D. The factors complement one another, and missing or misused inputs can make production inefficient or stop it.
Q49. What is a supply chain?
A. A network of individuals, organisations, resources, activities and technology involved in producing and selling goods
B. A list of employees working in a single office
C. A system used only to collect taxes
D. A method of measuring the literacy rate
Answer: A. A network of individuals, organisations, resources, activities and technology involved in producing and selling goods
Q50. What is one important responsibility of businesses towards workers and the environment?
A. Ignoring workplace safety and environmental damage
B. Providing fair compensation and safe working conditions while using resources responsibly
C. Preventing workers from receiving training
D. Releasing untreated industrial waste into rivers
Answer: B. Providing fair compensation and safe working conditions while using resources responsibly
