Question

State any two factors affecting fixed capital requirement.

Hint:

Fixed capital funds long-term assets like land, building, plant and machinery.

Answer 1

Step 1: Alternate pair:
Choice of technique — a capital-intensive technique needs more investment in machinery than a labour-intensive technique.

Step 2: Alternate pair 2:
Growth prospects — a firm planning future expansion needs to provide for additional fixed capital in advance.

Final Answer:
Two valid factors: Choice of technique (capital-intensive vs labour-intensive) and Growth prospects of the firm.