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Q.

Rajiv has a textile firm. For carrying out production, Rajiv spent money on procuring thread from traders, buying machines and equipment, and building a warehouse to store the cloth produced.

The expenditure incurred by Rajiv for conducting the production process is termed as ____.

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Detailed Solution

The expenditure done by Rajiv for conducting the production process is termed an investment. He makes this investment by buying raw materials in the form of thread from traders. He has also invested money in buying machines and equipment and building warehouses to store the produced cloth. Capital is essential for making investments. This capital is an important factor in production. A person can take a loan for this investment from the banks. There are also two types of fixed investment in tools and machinery.

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Rajiv has a textile firm. For carrying out production, Rajiv spent money on procuring thread from traders, buying machines and equipment, and building a warehouse to store the cloth produced. The expenditure incurred by Rajiv for conducting the production process is termed as ____.