Capital stock — human-made goods which are used in the production of other goods. These include machinery, tools, and buildings. They are of two types, fixed and working. Fixed are one time investments like machines, tools and working consists of liquid cash or money in hand and raw material.
What is the reward for capital as a factor of production?
Explanation: As factors of production, the reward for land is rent, capital is interest, labour is wages and salaries and entrepreneur is profit.
What distinguishes capital from other factors of production?
Capital has also been defined as “produced means of production”. This definition distinguishes capital from land and labour, because both land and labour are not produced factors. Land and labour are often considered as primary or original factors of production.
Which of the following is the best example of capital as a factor of production?
Capital comprises one of the four major factors of production, the others being land, labor, and entrepreneurship. Common examples of capital include hammers, tractors, assembly belts, computers, trucks, and railroads.
What makes capital an important factor of production?
Meaning and Definition: Capital is an important factor of production. It consists of those goods which are produced by the economic system and are used as inputs in the pr oduction of further goods and services. Capital may be physical or tangible or intangible. Capital goods yield valuable production services over time.
How are natural resources transformed into capital goods?
Natural resources are transformed into capital goods by human labor and subjected to market risk through entrepreneurial activity. Each factor of production is able to contribute to production processes and earn an income based on its use. The income for land is usually called rent. Labor receives wages.
How are natural resources a factor of production?
All of the factors of production interact with one another. Natural resources are transformed into capital goods by human labor and subjected to market risk through entrepreneurial activity. Each factor of production is able to contribute to production processes and earn an income based on its use. The income for land is usually called rent.
What is the role of capital in economic development?
Capital occupies an important position in determining the rate of economic development in the country. The main functions of capital, in brief, are as under: (i) Capital provides equipments which help in the process of economic development.
