ECONOMICS
ECONOMIC DEVELOPMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Investment in human capital has opportunity costs, but investment in physical capital does not. Other things the same, an economy’s factors of production are likely to be used more effectively if there is an economywide respect for property rights.
Detailed explanation-2: -The opportunity cost of investing in human capital is also the loss of consumption that is needed to provide the resources for investment. A country could “over-invest” in human capital if people were too highly educated for the jobs they could get-for example, if the best job a Ph.
Detailed explanation-3: -Physical capital refers to factors of production. Human capital has both social and private benefits and not physical capital.
Detailed explanation-4: -It is TRUE, that human capital formation creates physical capital. Physical capital consists of all the means of production that go towards producing goods and services. This capital can be in the form of plants and machinery, or services.