Explain any two characteristics of Capital.
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Answer:
Capital is man-made: It is created by man and is not a gift of nature. It is the mixed result of past labour of workers on natural resources. Capital is durable: Capital goods such as machinery, plants and factory buildings are durable goods which might last for a few years, while others may last for decades.
(i) Capital is a passive factor of production: Capital cannot produce without the help of active services of labour. To produce with machine, labour is required. Thus, labour is an active, whereas capital is a passive factor of production.
(ii) Capital depreciates: As we go on using capital, the value of capital goes on depreciating. When machines are used continuously for some time, these depreciate and their value falls.
(iii) Man produces capital: Capital is that wealth which is used in the production of goods. Capital is the result of human labour. Thus, every type of capital such as road, machines, etc. is produced by man.
(iv) Capital is not an indispensable factor of production: Production can be possible even without capital, whereas, land and labour are the original and indispensable factors of production.
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