Prelims 2024 · Economy · Question 87
With reference to physical capital in Indian economy, consider the following pairs: Items - Category: 1. Farmer's plough - Working capital 2. Computer - Fixed capital 3. Yarn used by the weaver - Fixed capital 4. Petrol - Working capital. How many of the above pairs are correctly matched?
Answer
Only two
1. Farmer's plough – Working capital: Incorrect. A plough is a durable tool used repeatedly in production, so it is fixed capital.
2. Computer – Fixed capital: Correct. A computer is a durable asset used over many production cycles, hence fixed capital.
3. Yarn used by the weaver – Fixed capital: Incorrect. Yarn is a raw material consumed in production, so it is working capital.
4. Petrol – Working capital: Correct. Petrol is used up in the production/transport process, so it is working capital.
Thus, only two pairs are correctly matched.