Question

Characteristics of capital as a factor of production

Answer 1

The court in the case of Currie v Misa defined consideration as a right, interest, profit, detriment, loss, or responsibility. Its main characteristic is that the promissor must give a promise of something that is of value, and the promisee must give something of value in exchange.

Answer 2

Capital is a passive factor of production – Capital cannot produce without the help of the active services of labour. To produce with machines, labour is required. Thus labour is an active whereas capital is a passive factor of production. Capital on its own cannot produce anything until labour works on it.