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Question
What are capital goods?
Solution
Capital goods refer to those final goods that are purchased by the producers (firms) for using them in the process of production. These goods enable the production to take place and thus, act as a fixed asset for the producers. These goods form an important part of the process of production. They are durable in nature and undergo wear and tear only after a long period of time and with repeated use. Also, generally these goods carry a high market value. For example, machinery, etc.
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RELATED QUESTIONS
Define capital goods.
State the statement which is true:
An example of durable goods is:
"Machine purchased by a firm is always a capital good."
Do you agree with the given statement? Give valid reasons for your answer.
From the statements given in Column I and Column II, choose the correct pair.
| Column-I | Column-II | ||
| A. | Vegetables grown in the Personal garden | (i) | Non-marketing activity |
| B. | A car used as a taxi | (ii) | Consumer good |
| C. | An air-conditioner used by household | (iii) | Capital good |
| D. | Scholarship given to students by government | (iv) | Factor income |
