Future Business Leader Achievments (FBLA) Economics Practice Exam

Deciding which mix of land, labor, and capital to use in a business is which of the following economic functions of the firm?

1. Allocating revenue

2. Organizing production

3. Identifying business wants

4. Identifying consumer wants

The correct answer is: Organizing production

The correct answer is about the function of a firm where it organizes production. In this context, organizing production refers to making strategic decisions on how to combine various inputs—land, labor, and capital—to produce goods or services efficiently and effectively. This function is crucial because it determines the optimal way of using resources to achieve production goals while minimizing costs and maximizing output. A firm must assess its available resources and how they can best be utilized in the production process. For instance, it would consider how much labor to hire versus how much machinery to invest in to create a productive workflow that meets market demands. The other options relate to different aspects of business operations but do not specifically address the decision-making process concerning resource allocation for production. Allocating revenue pertains to managing the finances after production processes, whereas identifying business wants and consumer wants focus on understanding market demand and preferences rather than the internal workings of production organization.