CBSE Class 8 · Factors of Production

Capital, Entrepreneurship, Technology and Responsibilities: Class 8 Notes and Questions

Updated 17 October 2026 · Fact-checked

Capital is money plus human-made assets such as machinery used to produce goods and services; entrepreneurship is starting an enterprise, taking risks and combining the factors; technology is the application of scientific knowledge that lets firms produce more with the same or fewer inputs. Factors are combined in different proportions (labour-intensive or capital-intensive), and producers must use them responsibly, with CSR required in India since 2014.

Notice the three sources of capital: a bank loan costs interest, while shares in the stock market earn shareholders a dividend.

Illustration drawn for QuestionBuddy.

Understand Capital, Entrepreneurship, Technology and Responsibilities

Capital. In economics, any asset, physical or financial, used to produce goods and services: money and durable human-made assets such as machinery, tools, equipment, vehicles, vending carts, computers, shops, factories and office buildings. Ratna needed money to lease land, buy furniture and kitchen equipment.

Sources of capital. Generally the first source is personal savings, family and friends. If that is insufficient, a bank loan is taken; the borrower repays part of the loan plus interest (the amount paid by the borrower to the lender for using the money for a specific time). Large companies raise money from the public through the stock market, where shares are bought and sold; they share profits with shareholders as a dividend (money paid regularly by a company to shareholders out of its profits).

Entrepreneurship. Starting your own enterprise or creating something new to solve a problem. An entrepreneur comes up with an idea, takes risks by investing money and time, gathers and combines the factors of production, identifies a problem and an innovative solution, makes key decisions, and contributes to society's welfare. A startup is an entrepreneurial venture with limited resources that aims at rapid growth using technology. NCERT profiles J.R.D. Tata (born 1904): head of the Tata Group, started India's first airline, Tata Airlines, in 1932 (later Air India), expanded into steel, cars, power and chemicals, cared for workers' conditions, and received the Bharat Ratna in 1992.

Technology. The application of scientific knowledge. Every production activity uses some technology. Examples: UPI payments, weather updates for farmers, GPS for the shortest routes, drones spraying fertilisers, robots in surgery. Old technology is often replaced (email instead of letters) but not always: pulleys and wheelbarrows remain in use. SWAYAM offers free online courses from Grade 9 onwards, and the National Career Service portal helps people find jobs, so technology removes geographical barriers to learning and work.

How the factors connect. Land, labour, capital, entrepreneurship and technology are combined in proportions that depend on the product. Agriculture, construction and handicrafts are labour-intensive; semiconductor chips and satellites are capital-intensive (need specialised machinery). The factors complement each other, and if one is missing or misused production can become inefficient or halt. New techniques can change the mix: more machines in agriculture reduce dependence on labour; 3-D printing can help revive dying textile art forms by producing handloom products at scale.

Supply chains. A supply chain is the network of individuals, organisations, resources, activities and technology involved in producing and selling goods. Inputs come from different places, but relying on far-off sources makes production vulnerable, as during the COVID-19 pandemic. NCERT notes that India was the world's second-largest mobile phone manufacturer after China in 2025, and its flow chart shows R&D, acquiring land and setting up the factory, raw materials, assembly and software, testing, mass production and packaging, and distribution to retail stores, with human effort at every stage.

Responsibilities. Natural resources are limited and can be degraded: waste from leather factories can pollute rivers and soil, and improperly recycled phones can leak lead and mercury. Producers should use resources responsibly, reduce waste, avoid pollution and protect the environment so that future generations' needs are not compromised. Towards workers: fair pay and safe conditions, skill development and training, and workplace rights and protections such as non-discrimination, health care and paid leave. Corporate Social Responsibility (CSR) asks businesses to address social and environmental concerns. NCERT states India was the first nation to bring in a CSR law, in 2014, requiring companies to spend 2 per cent of their average profits of the last three years on CSR activities.

Capital, Entrepreneurship, Technology and Responsibilities: key facts

Capital: Money
Machinery
Tools
Equipment
Vehicles
Buildings; Money plus human-made resources.
Sources of capital: Savings, family and friends
Bank loan (repay with interest)
Shares sold to the public (dividend); Small to large business.
Tasks of an entrepreneur: Takes risks
Combines factors of production
Identifies a problem and solves it
Makes key decisions
Contributes to society; Five tasks.
Types of production: Labour-intensive: agriculture, construction, handicrafts | Capital-intensive: semiconductor chips, satellites; Proportion of factors differs.
CSR in India: First CSR law in the world: 2014 | 2 per cent of average profits of the last three years; Mandated spending.

How to answer Capital, Entrepreneurship, Technology and Responsibilities questions

Questions ask for sources of capital, the role of an entrepreneur, the effect of technology, a classification into labour- or capital-intensive production, and the responsibilities of producers.

1Define the factor, then give two examples from a small enterprise and one from a large industry.
2For capital sources, move from savings to loan to shares, naming interest or dividend.
3For entrepreneurship, list risk-taking, combining factors, innovation and decisions.
4To classify intensity, ask whether the main cost and work is people (labour) or machines and money (capital).
5For responsibilities, divide into nature, workers and society (CSR).

Capital, Entrepreneurship, Technology and Responsibilities in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Loan, interest and the cost of capital

Suppose Rani borrows Rs 80,000 from a bank to buy an oven for her bakery and agrees to repay the loan in one year with interest of Rs 8,000.

How much does she repay in total, and what is the interest as a percentage of the loan?

Try it first, then show the solutionSolution

Total repayment = loan + interest = 80,000 + 8,000.
Interest percentage = 8,000 / 80,000 x 100.
Check: 80,000 x 10 / 100 = 8,000.

Answer: Total repayment = Rs 80,000 + Rs 8,000 = Rs 88,000. Interest as a percentage of the loan = 8,000 / 80,000 x 100 = 10 per cent (a hypothetical figure for practice). The oven is capital; the interest is the price of using borrowed money.

Memory hook: Borrowed capital comes with a price tag called interest.

Labour- versus capital-intensive

Suppose a village workshop makes 200 clay lamps a week with six potters and a few wheels, while a factory makes 20,000 plastic lamps a week with two operators and large moulding machines.

Which is labour-intensive and which capital-intensive, and why?

Try it first, then show the solutionSolution

The workshop relies mainly on people's skill and effort.
The factory relies mainly on expensive machines.

Answer: The workshop is labour-intensive because output depends mainly on the potters' effort. The factory is capital-intensive because output depends mainly on costly machinery and few workers.

Memory hook: More hands, labour; more machines, capital.

Tricks to remember Capital, Entrepreneurship, Technology and Responsibilities

Short memory aids. Say each one aloud once, then use it on a question the same day.

RCDT
Risk, Combine, Decide, Tackle a problem.
Use it when: What an entrepreneur does.
Interest vs dividend
Interest is paid on a loan you take; dividend is paid out of profits to shareholders.
Use it when: Two payments linked with capital.
Nature-Workers-Society
N-W-S: responsibilities of producers.
Use it when: Responsibilities and CSR.

Capital, Entrepreneurship, Technology and Responsibilities: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Dividend · 1 mark · MCQBoard level

A dividend is:
(a) money paid by a borrower for using a loan
(b) money paid regularly by a company to its shareholders out of its profits
(c) the price of land
(d) a government tax

Try it first, then show the solutionSolution

Interest is for loans; dividend is the share of profits paid to shareholders (1 mark).

Answer: (b) money paid regularly by a company to its shareholders out of its profits

Example 2: Loan and interest (3 marks) · 3 marks · Short answerHarder board level

A shopkeeper borrows Rs 50,000 from a bank for one year to buy a refrigerator and pays Rs 4,500 as interest. Find the total repayment and the rate of interest for the year, and state which factor of production the refrigerator is. (3 marks)

Try it first, then show the solutionSolution

Total repayment = 50,000 + 4,500 = Rs 54,500 (1 mark).
Rate = 4,500 / 50,000 x 100 = 9 per cent per year (1 mark).
The refrigerator is capital, a durable human-made asset (1 mark).

Answer: Total repayment = Rs 50,000 + Rs 4,500 = Rs 54,500. Rate of interest = 4,500 / 50,000 x 100 = 9 per cent for the year. The refrigerator is capital, since it is a human-made durable asset used in production or service.

Example 3: Assertion-reason: machines and labour · 1 mark · Assertion-reasonHarder board level

Assertion (A): Increased use of machines in agriculture can lower dependence on labour.
Reason (R): New techniques can change the proportion in which factors of production are combined.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.

Try it first, then show the solutionSolution

NCERT says new techniques can change the proportions; machine use in farming is its example (1 mark).

Answer: (a) Both A and R are true, and R is the correct explanation of A.

Example 4: Role of the entrepreneur (5 marks) · 5 marks · Long answerHarder board level

Who is an entrepreneur? Explain five tasks performed by an entrepreneur, with the example of J.R.D. Tata. (5 marks)

Try it first, then show the solutionSolution

Definition: one who starts an enterprise or creates something new to solve a problem (1 mark).
Takes risks by investing money and time (1 mark).
Combines the factors of production (1 mark).
Identifies a problem and an innovative solution; makes key decisions (1 mark).
Contributes to society's welfare; Tata Airlines in 1932 and care for workers (1 mark).

Answer: An entrepreneur is a person who comes up with an idea, takes risks, gathers the factors of production and works hard to make an enterprise succeed. The tasks are: taking risks by investing money and time; combining land, labour, capital and technology; identifying a problem and resolving to solve it with an innovation; making key decisions on how the business runs; and contributing to society through jobs and useful products. J.R.D. Tata illustrates this: he led the Tata Group, began India's first airline, Tata Airlines, in 1932, expanded into steel, cars, power and chemicals, believed businesses should help society and cared for workers' conditions.

Example 5: Case: an e-waste problem · 4 marks · Case-basedHOTS / competency

Read the case and answer.

NCERT notes that when old smartphones are not recycled properly, harmful substances like lead and mercury can leak into ground and water. It also says waste from leather factories can pollute rivers and soil, though the factories give local employment. Producers are urged to reduce waste, avoid pollution and adopt sustainable practices. India was the first nation in the world to bring in a CSR law, in 2014, requiring companies to spend 2 per cent of their average profits of the last three years on CSR.

(i) Name two harmful substances from improper recycling of phones. (1)
(ii) If a company's average profit of the last three years is Rs 5 crore, what is the minimum CSR spending? (1)
(iii) Explain how producers can balance jobs with environmental protection. (2)

Try it first, then show the solutionSolution

(i) Lead and mercury (1 mark).
(ii) 2 per cent of Rs 5 crore = 5 x 2 / 100 = Rs 0.10 crore, which is Rs 10 lakh (1 mark).
(iii) Continue to give jobs while treating and recycling wastewater, reusing recycled inputs and reducing pollution; CSR spending addresses community and environmental well-being (2 marks).

Answer: (i) Lead and mercury. (ii) 2 per cent of Rs 5 crore = Rs 0.10 crore = Rs 10 lakh (a hypothetical figure). (iii) Producers can keep providing jobs while treating and recycling wastewater before release, using recycled products as inputs and reducing waste, so that employment is not gained at the cost of rivers, soil and health; CSR spending adds to the well-being of local communities.

Where students lose marks in Capital, Entrepreneurship, Technology and Responsibilities

The slips examiners see most often, and what to write instead.

Mistake: Confusing interest and dividend
Both are money paid for capital.
Wrong working
Interest is a share of profits.
Right working
Interest is paid by a borrower to a lender; dividend is a share of profits paid to shareholders.
Do this: Loan = interest; shares = dividend.
Usually costs: 1 mark.
Mistake: Writing percentage without checking
Wrong denominator.
Wrong working
Rate = 4,500 / 54,500 x 100.
Right working
Rate = interest / loan amount x 100 = 4,500 / 50,000 x 100 = 9 per cent.
Do this: Divide by the amount borrowed, not by the total repaid.
Usually costs: 1-2 marks.
Mistake: Calling an entrepreneur a manager
Ignoring risk and innovation.
Wrong working
An entrepreneur only manages workers.
Right working
An entrepreneur takes risks, innovates, combines factors and makes key decisions.
Do this: Always mention risk and innovation.
Usually costs: 1 mark.

Exam tips

Show formula, substitution and units in interest and CSR numericals; double-check with a reverse calculation.
Always include the year 2014 and the 2 per cent figure when asked about the CSR law.
Classify with the question 'does the main cost lie in people or in machines?'.
Use J.R.D. Tata with Tata Airlines (1932) and the Bharat Ratna (1992) as the textbook's example.

Practice questions on Capital, Entrepreneurship, Technology and Responsibilities

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Which of the following is capital-intensive?
(a) Handicrafts
(b) Construction
(c) Manufacturing satellites
(d) Farming by hand
Hint
Specialised machinery.
Answer
(c) Manufacturing satellites
Q2 · 2 marks · Very short answerBoard level
Name any two online platforms mentioned in the chapter that help people learn skills and find jobs. (2 marks)
Hint
One for courses, one for jobs.
Answer
SWAYAM offers free online courses from Grade 9 onwards, and the National Career Service portal helps people find job opportunities across sectors.
Q3 · 3 marks · Short answerHarder board level
A startup borrows Rs 2,00,000 and must repay Rs 2,30,000 after one year. Find the interest paid and the rate per cent. Name two other ways in which businesses raise capital. (3 marks)
Hint
Interest = repayment - loan.
Answer
Interest = Rs 2,30,000 - Rs 2,00,000 = Rs 30,000. Rate = 30,000 / 2,00,000 x 100 = 15 per cent for the year. Businesses can also use personal savings and support from family and friends, or (for large companies) sell shares to the public through the stock market.
Q4 · 1 mark · Assertion-reasonHarder board level
Assertion (A): A supply chain that depends on far-off sources can be disrupted.
Reason (R): During the COVID-19 pandemic, reliance on far-off inputs halted production in many cases.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Is R an instance of A?
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q5 · 5 marks · Long answerHOTS / competency
Imagine you start a business making steel water bottles. List the inputs under the factors of production, say how you would obtain each, and explain what would happen if skilled workers were unavailable. (5 marks)
Hint
Land, labour, capital, entrepreneurship, technology; consequences of a missing factor.
Answer
Land: a factory plot, bought or rented, and raw materials such as steel, plus water and electricity. Labour: workers, hired and trained, for cutting, shaping, welding and packing. Capital: machinery, tools and money to meet costs, raised from savings, family and friends, or a bank loan on which interest is paid. Entrepreneurship: I would take the risk, plan, combine the factors and take the decisions. Technology: machines for forming and polishing, software for orders and online payment (such as UPI). If skilled workers were unavailable, quality and productivity would suffer, production could slow or stop, and I would have to invest in training or higher pay, showing that the factors are interconnected and a missing one can make production inefficient or halt it.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.What is capital in economics?Show answer
Any asset, physical or financial, used to produce goods and services.
2.What did J.R.D. Tata start in 1932?Show answer
India's first airline, Tata Airlines, which later became Air India.
3.What does SWAYAM stand for?Show answer
Study Webs of Active Learning for Young Aspiring Minds.
4.What is a supply chain?Show answer
A network of individuals, organisations, resources, activities and technology involved in producing and selling goods.
5.How much must companies spend on CSR under India's 2014 law?Show answer
2 per cent of their average profits of the last three years.

Capital, Entrepreneurship, Technology and Responsibilities: frequently asked questions

What are the sources of capital for a business?

Personal savings, family and friends; bank loans repaid with interest; and, for large companies, selling shares to the public through the stock market.

What is the difference between labour-intensive and capital-intensive production?

Labour-intensive production relies mostly on human effort, as in agriculture, construction and handicrafts; capital-intensive production relies mostly on machinery and money, as in making semiconductor chips or satellites.

What is CSR?

Corporate Social Responsibility: businesses addressing social and environmental concerns, such as reducing pollution and caring for communities, beyond making profits.