Match List-I (factors affecting the requirement of fixed capital) with List-II (examples):
| List-I | List-II |
|---|---|
| (A) Choice of technique | (I) A textile company starts a cement manufacturing plant. |
| (B) Technology upgradation | (II) Computers become obsolete faster and are replaced much sooner than furniture. |
| (C) Diversification | (III) A bank uses the ATM of another bank. |
| (D) Level of collaboration | (IV) A capital-intensive organisation relies less on manual labour. |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A)-(IV), (B)-(II), (C)-(I), (D)-(III)
| List-I | List-II | Reason |
|---|---|---|
| (A) Choice of technique | (IV) A capital-intensive organisation relies less on manual labour. | A capital-intensive firm uses machines in place of workers. So it needs more plant and machinery. |
| (B) Technology upgradation | (II) Computers become obsolete faster and are replaced much sooner than furniture. | Assets that become obsolete sooner must be replaced faster. So such firms need more fixed capital. |
| (C) Diversification | (I) A textile company starts a cement manufacturing plant. | Entering a new line of business needs new fixed assets. So the textile company’s fixed capital rises. |
| (D) Level of collaboration | (III) A bank uses the ATM of another bank. | Firms that share facilities, such as an ATM, each need less investment in fixed assets. |
NCERT (2026-27 Edition): “3. Choice of Technique: Some organisations are capital intensive whereas others are labour intensive. A capital-intensive organisation requires higher investment in plant and machinery as it relies less on manual labour. The requirement of fixed capital for such organisations would be higher. Labour intensive organisations on the other hand require less investment in fixed assets. Hence, their fixed capital requirement is lower.” “4. Technology Upgradation: In certain industries, assets become obsolete sooner. Consequently, their replacements become due faster. Higher investment in fixed assets may, therefore, be required in such cases. For example, computers become obsolete faster and are replaced much sooner than say, furniture. Thus, such organisations which use assets which are prone to obsolescence require higher fixed capital to purchase such assets.” “6. Diversification: A firm may choose to diversify its operations for various reasons, With diversification, fixed capital requirements increase e.g., a textile company is diversifying and starting a cement manufacturing plant. Obviously, its investment in fixed capital will increase.” “8. Level of Collaboration: At times, certain business organisations share each other’s facilities. For example, a bank may use another’s ATM or some of them may jointly establish a particular facility. This is feasible if the scale of operations of each one of them is not sufficient to make full use of the facility. Such collaboration reduces the level of investment in fixed assets for each one of the participating organisations.” |