Question

Under which of the following conditions the fixed capital requirements of a business is not likely to be low?

Options

• When the undertaking is providing public utilities

• When the labour-iatensive production technique is used

• When the scope of purchasing fixed assets on lease is low

• When the growth prospects of the firm are low

Answer 1

When the scope of purchasing fixed assets on lease is low

Explanation:

• Public utilities (like electricity, gas, water) need huge investments in fixed assets like machinery, plants, and infrastructure.
• Therefore, their fixed capital requirements are high, not low.