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 ?

Correct Option The correct option is (c). Explanation Production involves the organization of four key requirements: land, labour, physical capital, and human capital. Physical capital is further categorized based on its usage and durability in the production process into fixed capital and working capital. Statement-wise Analysis - Statement 1 is Correct: Tools, machines, and buildings are assets that can be used in production over many years. Since they are durable and not consumed in a single production cycle, they are classified as fixed capital. - Statement 2 is Incorrect: Production requires raw materials (e.g., yarn for a weaver) and money in hand to make necessary payments and purchase daily items. These items are used up during the production process. Therefore, they are classified as working capital, not fixed capital. - Statement 3 is Correct: Human capital represents the knowledge, skills, and enterprise required to organize land, labour, and physical capital to produce an output. It is the factor that binds the other inputs together for productive use. Key Takeaway Physical capital is divided into fixed capital (durable assets like machines) and working capital (consumable assets like raw materials and money). Human capital refers to the expertise required to manage these factors.

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

mcqmedium

Consider the following statements regarding the factors of production:

Tools, machines, and buildings are considered fixed capital.
Raw materials and money in hand are classified as fixed capital.
Human capital refers to the knowledge and enterprise required to put together land, labour, and physical capital.

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

Correct Option

The correct option is (c).

Explanation

Production involves the organization of four key requirements: land, labour, physical capital, and human capital. Physical capital is further categorized based on its usage and durability in the production process into fixed capital and working capital.

Statement-wise Analysis

Statement 1 is Correct: Tools, machines, and buildings are assets that can be used in production over many years. Since they are durable and not consumed in a single production cycle, they are classified as fixed capital.
Statement 2 is Incorrect: Production requires raw materials (e.g., yarn for a weaver) and money in hand to make necessary payments and purchase daily items. These items are used up during the production process. Therefore, they are classified as working capital, not fixed capital.
Statement 3 is Correct: Human capital represents the knowledge, skills, and enterprise required to organize land, labour, and physical capital to produce an output. It is the factor that binds the other inputs together for productive use.

Key Takeaway

Physical capital is divided into fixed capital (durable assets like machines) and working capital (consumable assets like raw materials and money). Human capital refers to the expertise required to manage these factors.

Your note

More from Chapter 1: The Story of Village Palampur

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 ?

medium

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 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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Correct Option

The correct option is (c).

Explanation

Statement-wise Analysis

Statement 1 is Correct: Tools, machines, and buildings are assets that can be used in production over many years. Since they are durable and not consumed in a single production cycle, they are classified as fixed capital.
Statement 2 is Incorrect: Production requires raw materials (e.g., yarn for a weaver) and money in hand to make necessary payments and purchase daily items. These items are used up during the production process. Therefore, they are classified as working capital, not fixed capital.
Statement 3 is Correct: Human capital represents the knowledge, skills, and enterprise required to organize land, labour, and physical capital to produce an output. It is the factor that binds the other inputs together for productive use.