Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Indian Economic Development: Human Capital Formation in India

Question:

Why must the owner of human capital be present in the place of production?

Options:

To ensure the physical capital is used efficiently.

To maintain personal hygiene and sanitation.

To facilitate the sale of human capital.

To provide services associated with human capital.

Correct Answer:

To provide services associated with human capital.

Explanation:

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.