Question

Which of the following statement(s) about capital as a factor of production is/are true?

• A. Man-made items like tools and machiney are a part of capital.
• B. Money which is used to procure raw materials and pay wages are also known as capital.
• C. The reward capital as a factor of production received is rent.
• D. Capital is immobile in nature.

Answer 1

Answer: (A), (B)

The correct options are
A Man-made items like tools and machiney are a part of capital.
B Money which is used to procure raw materials and pay wages are also known as capital.

Capital is the visible tangible man-made items which are used for the production of products. Machinery, tools, computers are a few examples of capital. Money which is used to pay wages and procure raw materials is also known as capital. The reward received by capital as a factor of production is interest.