How does fresh water differ from coal as a resource in the context of factors of production?

• A. Fresh water is classified as capital, whereas coal is classified as labor.
• B. Fresh water is a man-made resource, but coal is a natural resource.
• C. Fresh water is used exclusively in the production of consumer goods, while coal is used only in services.
• D. Fresh water is generally considered a renewable resource, while coal is a non-renewable resource.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the classification of factors of production, which typically include land (natural resources), labor (human effort), capital (man-made resources used in production), and entrepreneurship (organizing production).
2. Step 2: Identify fresh water and coal as types of natural resources, which fall under the 'land' category in factors of production, rather than labor or capital.
3. Step 3: Recognize the key difference between fresh water and coal in terms of renewability: fresh water is generally renewable because it is replenished through natural processes like the water cycle, whereas coal is non-renewable because it forms over millions of years and cannot be quickly replaced once used.
4. Step 4: Understand that this distinction affects how these resources are managed and used in production, with renewable resources like fresh water being more sustainable over time compared to non-renewable resources like coal.
5. Step 5: Conclude that the correct characterization is that fresh water is a renewable natural resource, while coal is a non-renewable natural resource, which is the fundamental difference in the context of factors of production.