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CMA Foundation · Fundamentals of Business Economics and Management · Utility, Wealth, Production

A farmer in Punjab has a tractor, a stock of wheat for sale, and a skill in scientific farming. Under the classification of wealth, which is the correct statement?

The tractor and wheat are material wealth because they are tangible goods, whereas the farmer's skill in scientific farming is immaterial or personal wealth. Skills are intangible, yet they are useful and scarce and create earning ability, so economics counts them within the wider idea of wealth.

  1. AAll three are material wealth only
  2. BThe tractor and wheat are material wealth, while the skill is treated as immaterial (personal) wealthCorrect
  3. COnly the tractor is wealth; wheat and skill are income
  4. DThe wheat is immaterial wealth, while the skill and tractor are material wealth

Explanation

Material wealth consists of tangible goods such as the tractor and wheat. Skills and abilities are non-material (immaterial or personal) wealth, as they are useful, scarce and give earning capacity. The other options misclassify tangible goods or skill.

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