"The entrepreneurial decision is an investment decision that augments the productive capacity of the economy".

Identify the function of entrepreneur.

Capital formation

The correct answer is Option (2) → Capital formation

The function of an entrepreneur, as indicated in the statement, is primarily related to fostering economic growth and development. Among the options provided, the most relevant function of an entrepreneur highlighted in the statement is Capital formation.

Entrepreneurs make investment decisions that lead to the creation of new businesses, products, and services, thereby contributing to the formation of capital in the economy. This process involves mobilizing financial resources and allocating them to productive ventures, which helps expand the economy's productive capacity and stimulates overall economic growth.

• Contribution to GDP : Increase in the Gross Domestic Product or GDP is the most common definition of economic development. Entrepreneurs generate income via organisation of production be it agriculture, manufacturing or services.
• Generation of Employment : Every new business is a source of employment to people with different abilities, skills and qualifications. As such entrepreneurship becomes a source of livelihood to those who do neither have capital to earn interest on nor have the land to earn rent.
• Generation of Business opportunities : Every new business creates opportunities for the suppliers of inputs (this is referred to as backward linkages) and the marketers of the output (what is referred to as forward linkages).