BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They increase production costs.
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The increase the production of goods.
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They decrease the productivity of labor.
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They decrease the productivity of management.
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Detailed explanation-1: -The correct answer is b) Their demand is derived, which means that the demand for capital goods is not direct and is instead derived from the demand for the goods and services that they help to produce. For example, a factory that produces cars will require machines, tools, and other capital goods to produce the cars.
Detailed explanation-2: -Answer and Explanation: Capital goods create consumer goods. If an economy increases its production of capital goods, it is upgrading its technology and productivity. This means that in the future, it will able to produce more consumer goods at a lower cost.
Detailed explanation-3: -Additional or improved capital goods is intended to increase labor productivity by making companies more productive and efficient. Newer equipment or factories leads to more products being produced, and at a faster rate.
Detailed explanation-4: -In economics, capital refers to the assets-physical tools, plants, and equipment-that allow for increased work productivity. By increasing productivity through improved capital equipment, more goods can be produced and the standard of living can rise.