Answer the following questions. What are the features of capital?

Answer the following questions.

What are the features of capital?

ANSWER:

Capital includes all the capital goods or assets used in production. These assets are used by the labour to produce goods.

The following are some of the features of capital:

i. Artificial factor - Capital cannot produce goods on its own and therefore, is regarded as an artificial factor of production.

ii. Derived demand - Capital is used in the production of goods meant for final consumption. It cannot be consumed directly. Therefore, it is said to have a derived demand.

iii. Highly mobile - Capital includes machinery, raw materials etc. which can be easily transferred from one place to the other and from one occupation to the other.

iv. Elastic supply - The amount of capital can be increased at any time as per the requirement and availability of funds.



v. Durable- Capital is durable in nature in the sense that it can be used again and again in the production process.

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