In the context of factors of production, activity rates are determined by which of the following?

• A. The level of technological advancement in production processes
• B. The total amount of capital invested in an economy
• C. The proportion of the working-age population that is employed or actively seeking work
• D. The number of firms operating in a given market

Answer: (C)

Verified step by step guidance

1. Understand that the activity rate, also known as the labor force participation rate, measures the proportion of the working-age population that is either employed or actively seeking employment.
2. Recognize that the activity rate is calculated as the ratio of the labor force to the working-age population, expressed as: \(\text{Activity Rate} = \frac{\text{Labor Force}}{\text{Working-Age Population}}\).
3. Note that the labor force includes all individuals who are employed plus those who are unemployed but actively looking for work.
4. Identify that factors like technological advancement, total capital investment, or the number of firms do not directly determine the activity rate, although they may influence employment levels indirectly.
5. Conclude that the correct determinant of the activity rate is the proportion of the working-age population that is employed or actively seeking work.