Question 49 from UPSC CSE 2024 - Economic s

Question

With reference to physical capital in the Indian economy, consider the following pairs:
1. Farmer's plough - Working capital
2. Computer - Fixed capital
3. Yarn used by the weaver - Fixed capital
4. Petrol - Working capital
How many of the above pairs are correctly matched?

IASCODEX · Accepted Answer

Correct Option: B. Only two

Strategy: - Identify assets as either long-term and reusable (fixed capital) or consumed within a single production cycle (working capital).
- Distinguish fixed capital examples (e.g., plough, computer) from working capital examples (e.g., yarn, petrol).
- Match provided options to their correct capital classification and count the accurately classified pairs.

Key Info: Physical capital in economics refers to man-made assets used in production, including tools, machinery, equipment, and raw materials.

- **Fixed capital** comprises long-term assets not consumed within a single production cycle. Examples include tractors, ploughs, machines, computers, and factory buildings. These assets provide productive capacity over time and depreciate gradually.
- **Working capital** is used up or transformed in the production process. It includes raw materials, fuel, intermediate goods, and day-to-day operating cash. Examples are yarn for weaving, petrol for running engines, seeds for planting, and cash for transactions.

## Pair Breakdown

1.  **Farmer's plough**: Fixed capital. It is a durable tool reused over many production cycles for tilling land.
2.  **Computer**: Fixed capital. Used over several production cycles and not consumed instantly; essential for office work or production processes.
3.  **Yarn used by the weaver**: Working capital. Yarn is converted into fabric during the production process; consumed within the production cycle.
4.  **Petrol**: Working capital. Used as fuel, it is consumed during operations and needs periodic replacement.

Understanding the distinction between fixed and working capital is vital for economics in resource allocation, sectoral planning, and financial management.

IASCODEX · Answer

Option A: Only one

IASCODEX · Answer

Option C: Only three

IASCODEX · Answer

Option D: All four

With reference to physical capital in the Indian economy, consider the following pairs: Farmer's plough - Working capital Computer - Fixed capital Yarn used by the weaver - Fixed capital Petrol - Working capital How many of the above pairs are correctly matched?

With reference to physical capital in the Indian economy, consider the following pairs:

Farmer's plough - Working capital

Computer - Fixed capital

Yarn used by the weaver - Fixed capital

Petrol - Working capital
How many of the above pairs are correctly matched?