Match List-I (factors affecting the requirement of fixed capital) wit…

Match List-I (factors affecting the requirement of fixed capital) with List-II:

List-I	List-II
(A) Nature of business	(I) A company may create higher capacity to meet the anticipated higher demand quicker.
(B) Scale of operations	(II) A trading concern needs less, as it does not have to purchase plant and machinery.
(C) Choice of technique	(III) A larger organisation needs a bigger plant and more space.
(D) Growth prospects	(IV) A capital-intensive organisation needs more, as it relies less on manual labour.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(II), (B)-(III), (C)-(IV), (D)-(I)

List-I	List-II	Reason
(A) Nature of business	(II) A trading concern needs less, as it does not have to purchase plant and machinery.	A trader buys and sells goods without making them. So it needs no plant and machinery and less fixed capital than a manufacturer.
(B) Scale of operations	(III) A larger organisation needs a bigger plant and more space.	A firm working at a higher scale needs more plant and more space. So its investment in fixed assets is higher.
(C) Choice of technique	(IV) A capital-intensive organisation needs more, as it relies less on manual labour.	A capital-intensive firm uses machines in place of workers. So it needs more fixed capital than a labour-intensive firm.
(D) Growth prospects	(I) A company may create higher capacity to meet the anticipated higher demand quicker.	A firm that expects to grow may build extra capacity in advance. This calls for a larger investment in fixed assets.

NCERT (2026-27 Edition): “1. Nature of Business: The type of business has a bearing upon the fixed capital requirements. For example, a trading concern needs lower investment in fixed assets compared with a manufacturing organisation; since it does not require to purchase plant and machinery, etc.
2. Scale of Operations: A larger organisation operating at a higher scale needs bigger plant, more space etc. and therefore, requires higher investment in fixed assets when compared with the small organisation.
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.”

“5. Growth Prospects: Higher growth of an organisation generally requires higher investment in fixed assets. Even when such growth is expected, a company may choose to create higher capacity in order to meet the anticipated higher demand quicker. This entails larger investment in fixed assets and consequently larger fixed capital.”

Match List-I (factors affecting the requirement of fixed capital) with List-II:

List-I	List-II
(A) Nature of business	(I) A company may create higher capacity to meet the anticipated higher demand quicker.
(B) Scale of operations	(II) A trading concern needs less, as it does not have to purchase plant and machinery.
(C) Choice of technique	(III) A larger organisation needs a bigger plant and more space.
(D) Growth prospects	(IV) A capital-intensive organisation needs more, as it relies less on manual labour.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(II), (B)-(III), (C)-(IV), (D)-(I)

List-I	List-II	Reason
(A) Nature of business	(II) A trading concern needs less, as it does not have to purchase plant and machinery.	A trader buys and sells goods without making them. So it needs no plant and machinery and less fixed capital than a manufacturer.
(B) Scale of operations	(III) A larger organisation needs a bigger plant and more space.	A firm working at a higher scale needs more plant and more space. So its investment in fixed assets is higher.
(C) Choice of technique	(IV) A capital-intensive organisation needs more, as it relies less on manual labour.	A capital-intensive firm uses machines in place of workers. So it needs more fixed capital than a labour-intensive firm.
(D) Growth prospects	(I) A company may create higher capacity to meet the anticipated higher demand quicker.	A firm that expects to grow may build extra capacity in advance. This calls for a larger investment in fixed assets.