Multiple Choice
Which strategy involves a company deciding where to locate its operations in order to optimize the use of factors of production?
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0. Basic Principles of Economics
Factors of Production
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Which of the following is a factor of production that a producer must consider when deciding what good to supply?
A
Consumer preferences
B
Labor
C
Land
D
Advertising
Verified step by step guidance1
Understand the concept of factors of production: these are the inputs used by producers to create goods and services. The main factors are typically land, labor, capital, and entrepreneurship.
Identify which options represent factors of production. 'Labor' refers to human effort used in production, and 'Land' refers to natural resources. Both are classic factors of production.
Recognize that 'Consumer preferences' and 'Advertising' are not factors of production. Instead, they relate to demand and marketing strategies, which influence what goods are supplied but are not inputs in the production process.
Conclude that when deciding what good to supply, a producer must consider factors of production like labor and land because these determine the capacity and cost of producing goods.
Therefore, among the given options, 'Labor' and 'Land' are the factors of production a producer must consider.
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