What are the features of capital?
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hi.
The characteristics or features of capital are:-
Man-made Factor : Capital is not a gift of nature. So it is not a primary or natural factor, it is made by man in capital goods industry. It is secondary as well as an artificial factor of production.
Productive Factor : Capital helps in increasing level of productivity and speed of production.
Elastic Supply : Supply of capital depends upon capital formation process. Capital formation depends upon savings and investment. By accelerating capital formation, capital supply can be increased. But it is a long term process.
Durable : Capital is not perishable like labour. It has a long life subject to periodical depreciation.
Easy Mobility : Movement of capital from one place to another is easily possible.
Is a Wealth : Since capital has all features of wealth viz. utility, scarcity, transferability and externality, capital is a wealth but wealth doesn't necessarily become capital.
Derived demand : As a factor of production, capital has a derived demand to produce finished goods which have a direct demand. e.g. demand for raw cotton is derived from demand for cotton cloth.
Round about production : Capital goods doesn't satisfy our wants directly. But resources should be diverted towards production of capital goods first. And thereafter such produced mean can be used to produce consumer goods having direct demand.
Social Cost : Resources have alternative uses. Either they can be put to production of capital goods or consumer goods. When resources are used for producing capital goods, it means society has sacrificed enjoyment of consumer goods. This is called social cost
hope it helps u
The characteristics or features of capital are:-
Man-made Factor : Capital is not a gift of nature. So it is not a primary or natural factor, it is made by man in capital goods industry. It is secondary as well as an artificial factor of production.
Productive Factor : Capital helps in increasing level of productivity and speed of production.
Elastic Supply : Supply of capital depends upon capital formation process. Capital formation depends upon savings and investment. By accelerating capital formation, capital supply can be increased. But it is a long term process.
Durable : Capital is not perishable like labour. It has a long life subject to periodical depreciation.
Easy Mobility : Movement of capital from one place to another is easily possible.
Is a Wealth : Since capital has all features of wealth viz. utility, scarcity, transferability and externality, capital is a wealth but wealth doesn't necessarily become capital.
Derived demand : As a factor of production, capital has a derived demand to produce finished goods which have a direct demand. e.g. demand for raw cotton is derived from demand for cotton cloth.
Round about production : Capital goods doesn't satisfy our wants directly. But resources should be diverted towards production of capital goods first. And thereafter such produced mean can be used to produce consumer goods having direct demand.
Social Cost : Resources have alternative uses. Either they can be put to production of capital goods or consumer goods. When resources are used for producing capital goods, it means society has sacrificed enjoyment of consumer goods. This is called social cost
hope it helps u
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The features of capital are as follows:
- For further production of wealth, one can use a part of wealth that is called capital. Except land, any kind of wealth is considered as capital.
- Without labour works, capital cannot produce anything.
- This is used for producing goods.
- Another important feature of capital is it's variable.
- The factor of transporting is easily available in case of capital.
- Savings accumulation of a person is also result of capital.
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