Which of the following statements are correct?
(A) Capital goods are final goods.
(B) Capital goods get transformed in the production process.
(C) Consumer durables undergo wear and tear with gradual use.
(D) Consumer durables are capital goods.
(E) Producing more capital goods today can raise the production of consumer goods in future.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (C) and (E) only
Final goods are consumption goods (durable and non-durable) or capital goods. Capital goods help production but are not transformed by it.
(A) Capital goods are final goods. — True. Capital goods are final goods, though not ultimately consumed.
(B) Capital goods get transformed in the production process. — False. Capital goods do not get transformed in the production process.
(C) Consumer durables undergo wear and tear with gradual use. — True. Consumer durables undergo wear and tear with gradual use.
(D) Consumer durables are capital goods. — False. Consumer durables are consumption goods; they only share durability with capital goods.
(E) Producing more capital goods today can raise the production of consumer goods in future. — True. More capital goods today means more capital to work with in future, so more output.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … Then there are other goods that are of durable character which are used in the production process. These are tools, implements and machines. While they make production of other commodities feasible, they themselves don’t get transformed in the production process. They are also final goods yet they are not final goods to be ultimately consumed. …” “2.1 Some Basic Concepts of Macroeconomics … They also undergo wear and tear with gradual use and often need repairs and replacements of parts, i.e., like machines they also need to be preserved, maintained and renewed. That is why we call these goods consumer durables. Thus if we consider all the final goods and services produced in an economy in a given period of time they are either in the form of consumption goods (both durable and non-durable) or capital goods. …” “2.1 Some Basic Concepts of Macroeconomics … But production of more capital goods would mean that in future the labourers would have more capital equipments to work with. We have seen that this leads to a higher capacity of the economy to produce with the same number of labourers. Thus total input itself would be higher compared to the case when less capital goods were produced. If total output is higher the amount of consumer goods that can be produced would surely be higher.” |