Statement 1: Production of goods and services is done by using factor services.
Statement 2: National product is distributed among the factors of production.
Answer & explanation
Correct answer: option 1
The correct answer is option 1: Both the statements are true
Statement 1: Production of goods and services is done by using factor services. This is correct. Factor services, such as labor, capital, land, and entrepreneurship, are inputs used in the production process to create goods and services. Therefore, production involves utilizing factor services.
Statement 2: National product is distributed among the factors of production. This is also correct. After the production of goods and services, the resulting national product (output) is distributed among the factors of production as factor incomes. These factor incomes include wages for labor, interest for capital, rent for land, and profit for entrepreneurship.