Question

The physical capital required for a shop keeper in the town

Answer 1

There are four requirements of production:

1. Land: contains natural resources, water, forests and minerals.

2. Labour: People do the work and manufacture goods and services. Labourers may be skilled, unskilled, educated and uneducated depending upon the production work and requirement.

3. Physical capital: Can be of fixed capital and working capital.

a. fixed capital: Tools, machines, buildings etc.. they may range from very simple tools such as farmers plough to sophisticated machines to generators, computers etc..

b. working capital: Raw materials and money in hand come under this category. Ex. Yarn used by weaver and clay used by potter. Some money is always required during production to make payments and buy other necessary items.

4. Human capital: The fourth important requirement is human capital. Without human labour production cannot be done.