What is a limited factor?

• A. Scarce resource
• B. Anything which limits the activity of an entity
• C. Fixed budget
• D. Standard hour

Answer: (B)

A limited factor is anything that restricts what an entity can achieve. It isn’t limited to scarce resources; it includes any condition that constrains activity, such as limited machine time, restricted skilled labour, a fixed budget, or even limited market demand. This broader idea explains why the term describes the factor that caps output or service levels under given conditions. For example, having only a set number of production hours or a tight budget both act as limited factors because they cap how much can be produced or spent. The other options describe specific instances of limits, but the general definition encompasses any constraint on activity.