Differentiate between fixed and working capital.
How is it an important factor of production?

SOLUTION:

Fixed Capital 
  1. Fixed Capital is the capital which is invested by the company in procuring the fixed assets required for the working of the business.
  2. Fixed capital is required for a longer period of time.
  3. In fixed capital, if we do not  have to buy inputs again and again, it saves our money.
  4. For example- capital requirement for the purchase of machinery, tools, etc.
Working capital
  1. Working capital is the capital which is required by the company for the purpose of financing its day to day operations.
  2. Working capital is required for a shorter period of time.
  3. In working capital we need to buy the inputs gain and again, therefore more money is required.
  4. For example- capital requirement for the purchase of raw material.
Human capital is an important factor of production. The concept of human capital refers to the education,on-the job training,and work experience of the labour force. An investment in human capital means investing in education or some form of on-the job training to improve work force quality. Such investments provide returns to the individual as well as to the economy as a whole. Individuals benefit from higher earnings, and the economy as a whole benefits from higher productivity.

  • 0
What are you looking for?