Capital
Definition
Capital represents all man-made goods that are used in production to create other goods and services. It includes physical assets such as machinery, equipment, tools, buildings, technology, and infrastructure.
Analogy
Think of capital as a toolbox filled with tools needed to build something. Just like how a carpenter uses different tools to construct furniture, producers use capital goods to create products and provide services.
Related terms
Physical Capital: Physical capital refers specifically to the tangible assets used in production, such as machinery and equipment.
Financial Capital: Financial capital refers to funds or money that is invested in businesses or used for productive purposes.
Depreciation: Depreciation is the decrease in value of a capital asset over time due to wear and tear, obsolescence, or other factors.
"Capital" appears in:
Subjects (2)
Study guides (3)
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