question_answer

Explain the four requirements for the production of goods and services. What are the items that come under physical capital?                                                    (5)

Answer:

    The four main requirements for the production of goods and services are (a) The first requirement is land and other natural resources. (b) The second is labour i.e., people who carry out the work for production. (c) The third is physical capital i.e., varieties of inputs that are required for production such as fixed capital (Building,   equipment,   machinery, tools, etc.) and working capital (cash, raw materials, etc.). (d) The fourth requirement is human capital, which may include technology, qualified manpower, etc. The items under physical capital are fixed capital and working capital.