The correct answer is: B. Increase in the capital.
Capital intensive industries are those that require a lot of capital to operate. This means that they need to invest a lot of money in machinery, equipment, and other physical assets. This can lead to an increase in the overall capital formation of a country.
Capital formation is the process of creating new capital goods. Capital goods are goods that are used to produce other goods and services. They include things like machines, tools, and buildings. Capital formation is important because it helps to increase the productivity of a country.
When a country has more capital, it can produce more goods and services. This can lead to economic growth. Capital formation also helps to create jobs. When businesses invest in new capital, they need to hire workers to operate the new equipment. This can lead to an increase in employment.
However, capital intensive industries can also have some negative effects. They can lead to a concentration of wealth in the hands of a few people. They can also lead to environmental problems, as they often require the use of natural resources.
Overall, capital intensive industries can have both positive and negative effects. It is important to weigh the costs and benefits of these industries before deciding whether or not to support them.
Here is a brief explanation of each option:
- Option A: Reduction in overall capital formation. This is not correct because capital intensive industries require a lot of capital to operate. This means that they need to invest a lot of money in machinery, equipment, and other physical assets. This can lead to an increase in the overall capital formation of a country.
- Option B: Increase in the capital. This is the correct answer because capital intensive industries require a lot of capital to operate. This means that they need to invest a lot of money in machinery, equipment, and other physical assets. This can lead to an increase in the overall capital formation of a country.
- Option C: Increase in future employment potential. This is not correct because capital intensive industries often require a lot of skilled labor. This can make it difficult for people to find jobs in these industries if they do not have the necessary skills.
- Option D: Increase in tax revenue. This is not correct because capital intensive industries often use a lot of tax breaks and subsidies. This means that they do not pay as much in taxes as other businesses.