Answer:
Under which factor of production would David classify the cost of his machinery?
C. capital
Explanation:
Factors of production can be defined as all the things that are needed to produce goods and services. They are generally referred to as inputs needed to create desired output. The factors of production include; land, labor, capital and entrepreneurship.
1. Land as a factor of production
Land as a factor of production is a broad perspective that can be divided into three main groups, namely; agricultural land that can be prepared to grow crops, land as a resource for developing real estate and also land that has natural raw materials that can be extracted and utilized for economic consumption.
2. Labor as a factor of production
Labor is the natural effort by an individual to bring a product into the market. It can take many forms, namely; a farmer who works on his/her land to grow crops that are then sold in a market or even a waitress offering her services at a hotel.
3. Capital as a factor of production
Capital in the literal sense refers to money as a factor of production, however the money itself only serves as a means by which other factors of production can be acquired for production. Capital can therefor be considered as the purchased good or service needed for production. It means that machinery and equipment can be considered as capital.
4. Entrepreneurship
This involves the use of all other factors of production to create one product or service for commercial purposes.
