what is fixed capital and working capital with example ?
in economics ch 1 the story of village palampur
(please give 3 points each )
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Answers
Farming is the main activity in Palampur, whereas several other activities such as small scale manufacturing, dairy, transport, etc. are carried out by villagers.
FIXED CAPITAL:
It includes tools, machines and buildings. Tools and machines range from very simple tools such as farmer's plough to sophisticated machines such as generators, turbines, computers etc. Tools, machines, buildings can be used in production over many year, and are called fixed capital.
WORKING CAPITAL:
It includes raw materials and money in hand. Production requires a variety of raw materials such as yarn used by weaver, clay used by potter etc. 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. Unlike tools, machines and buildings, these are used in production.
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Answer:
in simple words,
Fixed capital refers to the capital which stays constant,
example- machines,buildings,etc
working capital refers to the capital which keeps on changing,its never constant
example- raw materials, money in hand
Explanation: