Question

The Income of an entrepreneur is ______.

Options

• Contractual

• Always positive

• Residual

• Always negative

Answer 1

The Income of an entrepreneur is residual.

Explanation:

Entrepreneurs' income is considered residual because it remains after all other costs, such as wages, rent, and interest, have been paid. Unlike wages (which are contractual) or rent (which is fixed), an entrepreneur's income depends on the profitability of the business. If the business is successful, the residual income can be positive; if not, it can be low or even negative, reflecting the risks involved in entrepreneurship.