explain the Meaning of capital and its characteristics
Answers
Answer:
Capital is the result of human efforts. b) Capital is a passive factor of production: Capital cannot produce without the active help of the labour. c) Capital is the produced means of the production: Capital refers to the wealth which cannot be produced automatically.
Answer:
Meaning of Capital:
Capital has been defined as that part of a person’s wealth, other than land, which yields an income or which aids in the production of further wealth.
Obviously, if wealth is left unused or is hoarded, it cannot be considered capital.
Capital serves as an instrument of production.Anything which is used in production is capital.
Characteristics of Capital:
The following are the main characteristics of capital:
(i) Capital is man-made. It is, therefore, possible to increase its supply when the situation requires.
(ii) It involves the element of time, as it renders its service over a period of time. That is why payment for capital is calculated in terms of so much per cent per annum.
(iii) The use of capital makes roundabout methods of production possible. Its application increases efficiency and the productive power of all the factors with which it is combined and used.