Which of the following is NOT considered a factor of production when deciding how to make goods and services?

• A. Government policy
• B. Labor
• C. Land
• D. Capital

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of factors of production. Factors of production are the inputs used in the production of goods and services. They typically include Land, Labor, and Capital.
2. Step 2: Define each factor: Land refers to natural resources; Labor is the human effort used in production; Capital includes machinery, tools, and buildings used to produce goods and services.
3. Step 3: Recognize that Government policy is not a direct input in the production process but rather a set of rules or regulations that can influence production decisions.
4. Step 4: Compare the options given: Labor, Land, and Capital are all traditional factors of production, while Government policy is an external influence, not a factor of production itself.
5. Step 5: Conclude that Government policy is NOT considered a factor of production when deciding how to make goods and services.