distinguish between fixed capital working capital and human capital
Answers
1. Fixed capital refers to the investment made in the manufacture of goods or services. It is not constantly purchased.For example, infrastructure like buildings, insurance policies, legal documents, tools. etc.
2.Working capital refers to the goods hat are utilised in he process of production of goods and services.For example, money,raw materials,machines etc.
3.Human capital refers to the human skills and capacities which are invested through education and training for its enhancement and development.
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Answer:
(a)Tools, machines, buildings: Tools and machines range from very simple tools such as a farmer’s plough to sophisticated machines such as generators, turbines, computers, etc. Tools, machines, buildings can be used in production over many years, and are called fixed capital.
(b) Raw materials and money in hand: Production requires a variety of raw materials such as the yarn used by the weaver and the clay used by the potter. Also, some money is always required during production to make payments and buy other necessary items. Raw materials and money in hand are called working capital.
(c)Unlike tools, machines and buildings, these are used up in production.You will need knowledge and enterprise to be able to put together land, labour and physical capital and produce an output either to use yourself or to sell in the market. This these days is called human capital