Q. Consider the following statements:

1. Raw materials required to produce goods and services comes under the ‘fixed capital’ classification.
2. Land, labour, physical capital and human capital are called factors of production.

Which of the above is / are correct?
Answer: Only 2
Notes: Only the second statement is correct. The first statement is incorrect. Raw materials and money in hand are examples of working capital. Unlike tools, machines and buildings, these are used up in production. Every production is organised by combining land, labour, physical capital and human capital, which are known as factors of production.

This question is part of UPSC Daily 20 MCQ Series Course on GKToday Android app.