Economics: Capital Goods
Noah D. Rachel M. Aria G.
Capital Goods Defined
DEFINITION OF CAPITAL GOODS
They are used to produce other goods or services during a certain period of time. Some of the capital goods can be used in both production of consumer goods and service.
Capital goods are needed in order to have success and make profit in a market.
- Machines and tools used in the production of other goods, rather then being bought by costumers.
- Goods such as machinery, used in the production of commodities; producer goods.
- Durable goods
- Capital goods are tangible
How Capital Goods Relate to Factors of Production
Capital Are Used to Produce Consumer Goods and Services
Aria Ganji: The third factor of production is capital. Think of capital as the machinery, tools and buildings humans use to produce goods and services. Some common examples of capital include hammers, forklifts, conveyer belts, computers, and delivery vans. Capital differs based on the worker and the type of work being done. For example, a doctor may use a stethoscope and an examination room to provide medical services. Your teacher may use textbooks, desks, and a whiteboard to produce education services. The income earned by owners of capital resources is interest.
The Importance of Capital Goods & Impact on the Economy
Capital provides the resources companies need to be created and sustainable.
ENTREPRENEURS: Most importantly available and immediate capital in the economy allows entrepreneurs to start new businesses or ventures that provide innovations to and strengthen the economy
COMPANIES: Capital goods are resources companies need to be created and work.
Capital goods provide infrastructure to companies (work equipment) so they can properly and efficiently work. For example computers have made companies more efficient and able to cut costs.
Without Capital goods companies would struggle to run
Capital goods are goods used to produce consumer goods in companies, such as machinery in a factory or computers.
The use of capital goods in companies allow companies to run and produce consumer goods or services. This process between businesses and consumers is essential to the economies function and increases spending which increases economic activity.
CAPITAL GOODS SUPPORT THE ECONOMY
The more capital goods a country's economy has the more goods it can produce to export and use which strengthens their economy.
Bloomberg Article Summary/
Summary: Long lasting goods, such as computers and machinery, and nonmilitary capital have received increased orders that have exceeded all predictions. As a result manufacturing is fueling expansion of assembly line production along with an increased consumer spending.This increase in work equipment have significantly increased the demand for durable goods, and this is leading to an increased confidence in the U.S.'s manufacturers. Demand for transportation equipment and houses have also increased.
Analysis: This article analyses the impact of capital goods on the economy. At first it describes that there has been a recent dramatic increase in demand for capital goods in the market place, which has exceeded all expectations. As a result of this, the article demonstrates how increased capital good demand stimulates the economy, by increasing manufacturing and consumer spending. This effect is a result of increased manufacturing leading to increased increased trust in our nation's manufacturing and even effects in the housing market and transportation industry. Overall, this article shows the importance of capital goods in an economy, and how they can lead to over reaching effects that can strengthen and stimulate an entire country's economy and that they are the foundation to a successful economy.
Examples in local marketplace
Local marketplace: Is usually..
- a specialty grocery store, featuring locally grown produce, organic dairy products and fresh baked goods.
- Family own, local and organic produce, and hand crafted items from farmers and artisans.
Capital goods are the heart of a local marketplace. They provide the marketplace with products. If the local market place is doing bad the demand for capital goods and price will drop.