Match the LIST-I with LIST-II
| LIST-I | LIST-II |
| (Factor affecting Fixed capital requirements) | (Explanation) |
| A. Choice of Technique | I. Organizations that use assets which are prone to obsolescence require higher fixed capital. |
| B. Level of Collaboration | II. A developed financial market may provide leasing facilities as an alternative to outright purchase. |
| C. Financing Alternatives | III. Certain business organisations share each other’s facilities. |
| D. Technology Upgradation | IV. A capital-intensive organisation requires higher investment in plant. |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A-IV, B-III, C-II, D-I
(A) Choice of Technique — this matches (IV) A capital-intensive organisation requires higher investment in plant. A firm that chooses a capital-intensive technique uses machines in place of labour, so it has to invest more in plant and machinery. A labour-intensive firm needs less fixed capital.
(B) Level of Collaboration — this matches (III) Certain business organisations share each other’s facilities. When firms share facilities such as an ATM installed jointly by two banks, each of them needs to buy fewer fixed assets of its own.
(C) Financing Alternatives — this matches (II) A developed financial market may provide leasing facilities as an alternative to outright purchase. When an asset can be taken on lease, the firm pays a rent for its use instead of paying its full price at once, so less fixed capital is needed.
(D) Technology Upgradation — this matches (I) Organizations that use assets which are prone to obsolescence require higher fixed capital. Where technology changes fast, machines become out of date early and have to be replaced often, so more money must be kept for fixed assets.
NCERT (2026-27 Edition): “Factors affecting the Requirement of Fixed Capital … 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. …” “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.” “7. Financing Alternatives: A developed financial market may provide leasing facilities as an alternative to outright purchase. …” “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. …” |