Capital
In common sense, capital means money/wealth. But in economics, capital refers to all those goods which can be used for further production of goods such as mechanical equipment, raw materials etc. i.e., Capital is defined as productive wealth. capital may also be defined as manmade instrument of production. Thus, in economics, all money or wealth may not capital.
Characteristics/ Features of Capital
1. Man-made factor:
Capital is a man-made factor of production. It is the result of saving out of income. Capital formation takes place through the savings done by the people.
2. A mobile factor:
capital is the most mobile factor of production because It is easily and immediately transfer from one place to another.
3. A passive factor:
Capital is passive factor because capital is unable to produce without land and labour. i.e., capital remains idle(useless) without the aid of man.
4. A secondary factor of production:
Capital is a secondary factor because it is man-made factor whose supply increased by the efforts of man.
5. Capital depends upon technology of production:
The most important characteristic of capital is that it depends on the level of production technology employed by a nation.
6. Elastic supply:
The supply of capital is elastic because it is man-made factor of production. It means that capital can be increased by the effort of man.
Chapter 1 Part 11
