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In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. [1] A typical example is the machinery used in a factory. At the macroeconomic level, "the nation's capital stock includes buildings, equipment, software, and inventories during a ...
Capital goods take different forms. It may take the form of a machine-tool such as lathe or a conveyor belt. Capital goods can be highly specialised and have no use beyond the precise operation they are intended for. Despite this, capital in the Heckscher–Ohlin model is assumed to be homogeneous and transferable to any form if necessary.
The means of production (or capital goods) and the means of consumption (or consumer goods) are mainly produced for market sale; output is produced with the intention of sale in an open market; and only through sale of output can the owner of capital claim part of the surplus-product of human labour and realize profits.
N.G. Mankiw definition from the book Economics: Capital is the equipment and structures used to produce goods and services. Physical capital consists of man-made goods (or input into the process of production) that assist in the production process. Cash, real estate, equipment, and inventory are examples of physical capital. [1] Capital goods ...
In political philosophy, the means of production refers to the generally necessary assets and resources that enable a society to engage in production. [1] While the exact resources encompassed in the term may vary, it is widely agreed to include the classical factors of production (land, labour, and capital) as well as the general infrastructure and capital goods necessary to reproduce stable ...
This model assumes that the stock of capital goods (K) is proportional to the level of production (Y): K = k×Y. This implies that if k (the capital-output ratio) is constant, an increase in Y requires an increase in K. That is, net investment, I n equals: I n = k×ΔY. Suppose that k = 2 (usually, k is assumed to be in (0
A good in economics is any object, service or right that increases utility, directly or indirectly. A good that cannot be used by consumers directly, such as an "office building" or "capital equipment", can also be referred to as a good as an indirect source of utility through resale value or as a source of income.
Thus, the marginal product of capital is the difference between the amount of output produced with K + 1 units of capital and that produced with only K units of capital. [2] Determining marginal product of capital is essential when a firm is debating on whether or not to invest on the additional unit of capital.