GK
BUSINESS MANAGEMENT
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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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They decrease the productivity of labor.
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They increase the production of goods.
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They decrease the productivity of management.
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Detailed explanation-1: -Capital goods play a vital role in increasing the production of goods in the long term, or in other words, it increases the production capacity of goods and services.
Detailed explanation-2: -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-3: -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-4: -Capital goods are physical assets that a company uses in the production process to manufacture products and services that consumers will later use. Capital goods include buildings, machinery, equipment, vehicles, and tools. Capital goods are not finished goods, instead, they are used to make finished goods.
Detailed explanation-5: -Answer and Explanation: Capital goods are used to manufacture other goods. This statement is TRUE.