Question

Capital is a factor of production that has been produced for use in the production of other goods and services. Which of the following are examples of capital?

computer software

money

airports

Answer 1

The correct examples of capital as one of the factor of production are :

1. Computer software

2. Airport

Explanation:

Capital is the factor of production that helps in production of other goods and services. It includes the following because:

a. Computer software- it is considered as capital because it helps in production of another goods and services. Capital involves intellectual discoveries as it involves production of other goods such as computer software. Thus, it is a capital as factor of production.

b. Aiports- it is also considered as capital because it also helps in the production of other goods and services by providing good infrastructure.

Thus, airports and computer software are considered as capital. Money is ignored as capital factor of production because it is only a medium to purchase resources for production of goods and services. It does not itself contribute in the production of other goods and services, thus money is not considered as capital factor of production.