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Question
Is a motor car owned by a doctor circulating capital or fixed capital? Give two reasons to support your answer.
Solution 1
It is a fixed capital, as it is:
- A doctor's car can be used for numerous purposes.
- A doctor's car can be utilized again and again.
Solution 2
Fixed capital is a type of capital that is used again and again for the further production of goods, such as machines, office furniture, motor cars for office use, factory buildings, etc. Prof. Hicks has used the term 'durable use producer goods' for fixed capital.
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