Choose the statement that is true/false:

Tools, machines, and buildings can be used for production for a long period, it is called working capital.

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True

False

answer is B.

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Detailed Solution

The above statement is false.
Capital is an essential factor in production. There are two types of capital, fixed capital and working capital. Fixed capital is an investment in tools, machinery, and buildings that are done for a long time and are called fixed capital. This investment is one-time and huge but is necessary. On the other hand, the working capital includes the capital required to run the daily production operations. Therefore, the correct statement should be that tools, machines, and buildings can be used for production for a long time, and it is called fixed capital.

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