what do you mean by fixed capital? give one example.
Answers
Answer:
For Ricardo, fixed capital referred to any kind of physical asset that is not used up in the production of a product. This was opposed to Ricardo's idea of circulating capital, such as raw materials, operating expenses, and labor. In Marxian economics, fixed capital is closely related to the concept of constant capital.
The meaning of fixed capital can be easily grasped from these points:
- Fixed capital is a compulsory initial investment made in the business.
- It helps to lay down the basic infrastructure on which business is supposed to stand and flourish in a long run.
- It is a part of total capital invested in the business.
- It has a permanent existence in the business to meet its long-term needs.
What are the examples of fixed capital?
Examples of Fixed Capital.
Common examples of fixed capital investments are as follows:
- Plant and machinery.
- Factory's land and its buildings.
- Company's headquarter (HQ), administrative areas, regional and local offices, and their premises.
Answer:
Those materials which can be used in production over many years are called FIXED CAPITAL . ... this means raw materials and money in hand, Production requires a variety of raw materials such as the yarn is used by the weaver and clay used by the potter.