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Write Short Note on the Following: Types of Capital - Economics

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Question

Write short note on the following:

Types of capital

Short Note

Solution

Capital can be classified into the following categories:

i. On the basis of ownership:

a. Private capital - It is owned by private individuals or institutes.
b. Public capital - It is owned by the government or a society.

ii. On the basis of mobility:

a. Sunk capital - It is the capital which is used only for a specific purpose. For instance, washing machines, which are used only for the specific purpose of washing clothes.
b. Floating capital - It is the capital which is used for a variety of purposes. For example - electricity.

iii. On the basis of nature:

a. Real capital - It is the capital which is used in the production of other goods. For example, capital assets like buildings, machinery, raw materials etc.
b. Money capital - It is the capital which is in the form of money. This capital is used to purchase real capital.

iv. On the basis of durability:

a. Fixed capital - It refers to the capital which is used in the process of production repeatedly.
b. Working capital - It refers to the capital which is used in the process of production only once.
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Chapter 7: Factors of Production - Exercise 3 [Page 61]

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Micheal Vaz Economics [English] 12 Standard HSC
Chapter 7 Factors of Production
Exercise 3 | Q 2.2 | Page 61

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