Consider the following statements regarding Physical Capital: 1. It is the variety of inputs required at every stage during production. 2. Physical capital consists only of fixed assets like machines and excludes raw materials. 3. Money in hand is considered working capital as it is used for day-to-day payments. Which of the following statements are correct ?

The correct option is (c). Explanation Physical capital is one of the primary factors of production. It refers to the variety of tangible inputs required at every stage during the production process. It is structurally classified into two categories: Fixed Capital and Working Capital. Statement-wise Analysis: - Statement 1 is Correct: Physical capital is broadly defined as the variety of inputs required at every stage during production. This encompasses all man-made goods used to produce other goods and services. - Statement 2 is Incorrect: Physical capital is not limited to fixed assets. It consists of two distinct parts: - Fixed Capital: Tools, machines, and buildings that can be used in production over many years. - Working Capital: Raw materials and money in hand. Therefore, raw materials are included in physical capital, not excluded. - Statement 3 is Correct: Production requires money to make payments and buy necessary items during the process. Along with raw materials, money in hand is classified as working capital because it is used up or circulated during the production cycle, unlike fixed capital which remains durable. Key Takeaway: Physical Capital is the aggregate of Fixed Capital (durable assets like machinery) and Working Capital (transient inputs like raw materials and money in hand).

NCERT Class 9 Economics — Chapter 1: The Story of Village Palampur

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Consider the following statements regarding Physical Capital:

It is the variety of inputs required at every stage during production.
Physical capital consists only of fixed assets like machines and excludes raw materials.
Money in hand is considered working capital as it is used for day-to-day payments.

Which of the following statements are correct ?

Official previous-year question

Verified 1 Aug 2026.

Options

A1 and 2 only
B2 only
C1 and 3 only
D1, 2 and 3

Did you get this right?

Solution

The correct option is (c).

Explanation

Physical capital is one of the primary factors of production. It refers to the variety of tangible inputs required at every stage during the production process. It is structurally classified into two categories: Fixed Capital and Working Capital.

Statement-wise Analysis:

Statement 1 is Correct: Physical capital is broadly defined as the variety of inputs required at every stage during production. This encompasses all man-made goods used to produce other goods and services.
Statement 2 is Incorrect: Physical capital is not limited to fixed assets. It consists of two distinct parts:
- Fixed Capital: Tools, machines, and buildings that can be used in production over many years.
- Working Capital: Raw materials and money in hand. Therefore, raw materials are included in physical capital, not excluded.
Statement 3 is Correct: Production requires money to make payments and buy necessary items during the process. Along with raw materials, money in hand is classified as working capital because it is used up or circulated during the production cycle, unlike fixed capital which remains durable.

Key Takeaway:
Physical Capital is the aggregate of Fixed Capital (durable assets like machinery) and Working Capital (transient inputs like raw materials and money in hand).

Your note

More from Chapter 1: The Story of Village Palampur

Every production is organised by combining which of the following factors? 1. Land 2. Labour 3. Physical Capital 4. Human Capital

hard

Consider the following statements regarding traditional farming methods used till the mid-1960s: 1. The seeds used were traditional ones with relatively low yields. 2. Farmers relied exclusively on chemical fertilizers for traditional farming. 3. Traditional seeds required less irrigation compared to High Yielding Variety seeds. Which of the following statements are correct ?

medium

Which of the following is a characteristic of High Yielding Variety (HYV) seeds?

hard

Consider the following statements regarding the factors of production: 1. Tools, machines, and buildings are considered fixed capital. 2. Raw materials and money in hand are classified as fixed capital. 3. Human capital refers to the knowledge and enterprise required to put together land, labour, and physical capital. Which of the following statements are correct ?

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Consider the following statements regarding Modern Farming Methods and the Green Revolution: 1. High Yielding Variety (HYV) seeds required less water compared to traditional seeds. 2. HYV seeds needed chemical fertilizers and pesticides to produce the best results. 3. Farmers of Punjab, Haryana, and Western Uttar Pradesh were the first to try out the modern farming method in India. Which of the following statements are correct ?

hard

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The correct option is (c).

Explanation

Statement-wise Analysis:

Statement 1 is Correct: Physical capital is broadly defined as the variety of inputs required at every stage during production. This encompasses all man-made goods used to produce other goods and services.
Statement 2 is Incorrect: Physical capital is not limited to fixed assets. It consists of two distinct parts:
- Fixed Capital: Tools, machines, and buildings that can be used in production over many years.
- Working Capital: Raw materials and money in hand. Therefore, raw materials are included in physical capital, not excluded.
Statement 3 is Correct: Production requires money to make payments and buy necessary items during the process. Along with raw materials, money in hand is classified as working capital because it is used up or circulated during the production cycle, unlike fixed capital which remains durable.

Key Takeaway:
Physical Capital is the aggregate of Fixed Capital (durable assets like machinery) and Working Capital (transient inputs like raw materials and money in hand).