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Question
"Machine purchased by a firm is always a capital good."
Do you agree with the given statement? Give valid reasons for your answer.
Options
Agree
Disagree
MCQ
Solution
I disagree with the given statement.
Explanation:
Capital goods are those final goods which help in the production of other goods and services. A machine purchased by a firm will be a capital good when it is used for the production of other goods and services. However, if it is purchased by a firm for resale purposes in the same year, it will be considered as an intermediate good and not a capital good.
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Basic Concepts - Capital Goods
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RELATED QUESTIONS
Define capital goods.
What are capital goods?
State the statement which is true:
An example of durable goods is:
From the statements given in Column I and Column II, choose the correct pair.
| Column-I | Column-II | ||
| A. | Vegetables grown in the Personal garden | (i) | Non-marketing activity |
| B. | A car used as a taxi | (ii) | Consumer good |
| C. | An air-conditioner used by household | (iii) | Capital good |
| D. | Scholarship given to students by government | (iv) | Factor income |
