Question

Which statements correctly identify limitations of the factors of production? Check all that apply.

Economies must consider their limitations when answering the three questions of economics.
Land is a factor of production that is limited only by the amount available.
Capital includes all money and physical facilities needed to create a product.
Labor is a factor driven by the size of the population, education, and standard of living.
An economy can function well when producing outside its limitations.

Answer 1

Correct: 1 and 4.

Brief reasons:
- 1 is true — economies must face resource limitations (scarcity) when answering the three economic questions.
- 4 is true — labor depends on population size and the workforce’s education and living standards (quantity and quality).

Why the others are incorrect:
- 2 is misleading/false — land is limited by more than just raw quantity (quality, location, legal use, etc.).
- 3 is false — capital refers to physical capital (machines, buildings, tools) and human-made resources used in production; money itself is not a factor of production.
- 5 is false — producing “outside” an economy’s limitations (beyond its production possibilities) is not feasible.