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Class : 11
Unit : Economics

What is Capital? Explain its features.

Ans : Generally, people think money is capital but it is not correct because money is not directly use to produce goods and services. It is only use to purchase capital goods like machinery, equipment and other factors of production. Capital refers to all man made goods which are used for further production. Capital is different from wealth. All capital is wealth but all wealth is not capital. Features of Capital a) Man-made factor:- Capital is manmade factor of production which is used to produce goods and services and yields income. Thus, every types of capital such as machine, building, factories etc. are produce by man. b) Mobile factors of production:- Capital is mobile factor of production because it can be transferred from one place to another or one use to another. c) Passive factor of production:- Capital is passive factor of production because capital itself can’t produce anything unless labor is used to utilized it in production channel. d) Depreciable:- Capital is subject to depreciation when it is used in production process. Capital has its lifetime. It can be wear or tear out during its lifetime. e) Elastic in supply:- Since capital is manmade factor of production. It’s supply is elastic that is supply of capital can be increased or decreased.
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