Which factor of production is most closely associated with the power given to an individual producer to make decisions about resource allocation and production methods?

• A. Capital
• B. Land
• C. Labor
• D. Entrepreneurship

Answer: (D)

Verified step by step guidance

1. Understand the definition of each factor of production: Land refers to natural resources, Labor refers to human effort, Capital refers to manufactured goods used to produce other goods, and Entrepreneurship refers to the ability to organize resources and make decisions about production.
2. Recognize that the question asks about the factor most closely associated with the power to make decisions about resource allocation and production methods, which involves taking initiative and bearing risks.
3. Recall that Entrepreneurship is the factor of production that involves decision-making, innovation, and risk-taking to combine land, labor, and capital effectively.
4. Compare the roles: while land, labor, and capital are inputs, entrepreneurship is the driving force that directs how these inputs are used.
5. Conclude that the factor of production linked to decision-making power and resource allocation is Entrepreneurship.