Answer: Option A
Answer: (a)
In economics, factors of production are the inputs to the production process.
There are three basic factors of production:
land,
labour,
capital.
The payment for use and the received income of a landowner is rent. The payment for someone else’s labour and all income received from one’s own labour is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings.
So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.