Which of the following best describes how Graeter’s owners have used the four factors of production to build their business over time?

• A. They combined land (ingredients and location), labor (skilled workers), capital (machinery and equipment), and entrepreneurship (innovative management) to expand and improve their ice cream business.
• B. They relied solely on natural resources and did not invest in labor or capital.
• C. They used only labor and capital, without considering land or entrepreneurship.
• D. They focused only on entrepreneurship, ignoring the importance of land, labor, and capital.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the four factors of production in microeconomics: land, labor, capital, and entrepreneurship. Each factor plays a unique role in producing goods and services.
2. Step 2: Identify how each factor applies to Graeter's ice cream business: 'land' includes natural resources like ingredients and the physical location; 'labor' refers to the skilled workers who make the ice cream; 'capital' involves machinery and equipment used in production; and 'entrepreneurship' is the innovative management that drives business growth.
3. Step 3: Analyze the given options by checking which factors of production are mentioned and whether they align with the comprehensive use of all four factors in building the business.
4. Step 4: Recognize that the best description includes all four factors working together, as this reflects a realistic and complete approach to business development in microeconomics.
5. Step 5: Conclude that the correct answer is the one that states Graeter’s combined land, labor, capital, and entrepreneurship to expand and improve their ice cream business, demonstrating effective use of all factors of production.