S. Mehta, J. Tinio, M. Horne, S. Cole, C. Hammond, A. Khan
Definition of Capital Goods
Capital goods are tangible assets used by organizations to produce goods and services.
i.e. office buildings, equipment, and machinery
Examples in the Local Marketplace
Many examples in the local marketplace include computers, buildings, machinery and utilities, and office equipment. All of these things are in the capital goods category because they are used for that genre of work and are in the market. These are all man-made goods made with modern technology to expand business.
Produce Consumer Goods and Services
Capital goods are those used to produce other goods and services. The machinery and equipment of capital goods make consumer goods and services that people will buy. Anything that helps make another good or service can be considered a capital good, and it is used a lot in modern businesses.
Relation to Factors of Production
Capital goods are one of the four factors of production. The capital is all of the tools and machinery used to produce a good or service. Capital has two economic definitions as a factor of production. Capital can represent the monetary resources companies use to purchase natural resources, land and other capital goods. Capital also represents the major physical assets individuals and companies use when producing goods or services. Individuals may create their own capital production resources, purchase them from another individual or business or lease them for a specific amount of time from individuals or other businesses.
Importance and Impact
Aside from allowing a business to create goods or provide services for consumers, capital goods are important in other ways as well. In an industry where equipment and materials are expensive, they can prevent new companies from emerging. if businesses cannot afford the machinery it needs to create products, it will not be able to compete as well in the market.
Analysis and Summary of
'The Game has Changed'
According to the article, this year, orders for lasting good climbed in November by the most in 10 months and new home sales exceeded forecasts. This year there are higher mortgages and higher prices for homes so customers aren't spending as much on purchasing homes. Manufacturing and the expansion of assembly lines helped to produce to stronger demand for motor vehicles and home constructive materials. Increased consumer spending and prospect of smaller federal budget cuts is making companies more confident in the economic outlook. A gain in business equipment demand helped drive a 3.5% increase in orders for all durable goods. This year, stockpiles increased at a $115.7 billion pace, the most in 3 years.