With reference to physical capital in Indian economy, consider the following pairs: Items — Category. 1.…
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?
Only one
Only two
Only three
All four
Solution
Computer (fixed capital, durable) and Petrol (working capital, consumed in production) are correctly matched. Farmer's plough is a tool used over many years — fixed capital, not working capital. Yarn is raw material consumed in weaving — working capital, not fixed.