The owner of a bus need not be present where the bus is used, but the bus driver must be present. Why must the driver be present?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Only the services of human capital are sold, not human capital itself.
Human capital cannot be sold in the market; only its services are sold. So the owner of the skill, the driver, has to be present where the work is done. The bus, being physical capital, can work without its owner.
Option (1) Human capital is completely mobile between countries. — Incorrect. Human capital is not perfectly mobile between countries.
Option (2) Only the services of human capital are sold, not human capital itself. — Correct. This is why the driver must be there.
Option (3) Human capital, like physical capital, creates only private benefits. — Incorrect. Human capital creates both private and social benefits.
Option (4) Human capital depreciates only through continuous use, like a machine. — Incorrect. Human capital depreciates with ageing; continuous use is how a machine depreciates.
NCERT (2026-27): “Box 4.1: Physical and Human Capital … You know that the owner of a physical capital, say a bus, need not be present in the place where it is used; whereas, a bus-driver, who possesses the knowledge and ability to drive the bus, should be present when the bus is used for transportation of people and materials. Physical capital is tangible and can be easily sold in the market like any other commodity. Human capital is intangible; it is endogenously built in the body and mind of its owner. Human capital is not sold in the market; only the services of the human capital are sold and, hence, there arises the necessity of the owner of the human capital to be present in the place of production. The physical capital is separable from its owner, whereas, human capital is inseparable from its owner. …” |