Enterprise is one of the four factors of production. Which of the following is a definition of enterprise?

Answer options:

The equipment used to produce the goods and services.

The process of changing inputs such as raw materials into goods and services.

The skills and number of employees employed by the business.

The skills of people involved in the business to identify business opportunities.

How to approach this question

Recall the four factors of production: Land, Labour, Capital, and Enterprise. Identify which of the options describes the other factors and eliminate them. The remaining option will be the definition of Enterprise.

Full Answer

D.The skills of people involved in the business to identify business opportunities.✓ Correct

The correct answer is D. Enterprise is the human element that takes the risk of organising the other three factors of production (land, labour, capital) to produce goods and services and identify business opportunities.

The four factors of production are the resources businesses use to create goods and services. \n1. **Land:** Natural resources.\n2. **Labour:** The human effort, both mental and physical.\n3. **Capital:** Man-made resources used in production, like machinery and tools.\n4. **Enterprise:** The skill and risk-taking ability of the person (the entrepreneur) who brings the other three factors together to produce a good or service.

Common mistakes

✗ Confusing Enterprise with Labour (C) or Capital (A). Enterprise is the specific skill of organising the other factors and taking risks.

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Enterprise is one of the four factors of production. Which of the following is a definition of enterprise?

How to approach this question

Full Answer

Common mistakes

Practice the full AQA GCSE Business Paper 1

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