Capital Goods

Chitanya D, Kevin F, Nick M, Markel H, Justin L, Ian S

Definition of Capital Goods

Any tangible assets that an organization uses to produce goods or services such as office buildings, equipment, and machinery. Consumer goods are the end result of this production process.

Examples in Local Marketplace





-Metal Working/Forming Machines

How Are They Used to Produce Consumer Goods and Services?

Capital goods are the materials and equipment needed to produce Consumer goods, for example: Machinery is needed to make textiles. Also, Capital goods help make services because they allow equipment like lawn mowers and chain-saws to be made which in return can be used for services like lawn-mowing businesses, and tree cutting services.

How Capital Goods Relate to Factors of Production

First of all, the factors of production are land, labor,and capital. Capital goods are in fact a factor of production. How do they relate to factors of production? Capital goods are the creators of most man-made products. Land, and labor are the factors that produce capital goods which then make products that we use everyday. Thus, Capital Goods are related to factors of production

The Importance of Capital Goods & Impact on Economy

Without capital goods, there wouldn't be an "economy." Capital goods are the factors that produce consumer goods like clothes, electronics, shoes, and buildings. Without Capital goods, there wouldn't be anything (but grocery's and such) that consumers could buy. If there was a sudden scarcity of these Capital goods, the country would fall into a depression, and many jobs would be lost because services to manufacture these "consumer goods" would be gone.

Analysis/Summary of Article

Orders for many consumer goods like machinery and computers have increased the economy in small rates. Non-military equipment business investment has increased 4.5%. Another thing that is increasing the economy is the expansion of the assembly line. Car manufacturing and demand for building materials has increased so there is a increase in consumer spending. This is building confidence for many business. The increase in demand for business equipment helped increase the orders of durable goods by 3.5% in the past month. Throughout 2014, acceleration in manufacturing increased, and it produced 21.8% more non-military aircrafts. Also, demand for vehicles increased due to the increase of speed in manufacturing. Everything has benefited so far in 2014 except transportation. Transportation equipment increased slightly by about .7%. Finally, the housing market is booming. 435,100 new homes were sold this year which is the most since 2008. These are the main factors for the increase of Americas economy.

Works Cited

"Capital Goods." Investopedia. N.p., n.d. Web. 10 Feb. 2014.

"Capital Goods." N.p., n.d. Web. 10 Feb. 2014

"Capital Goods Demand Signals Stronger U.S. Growth: Economy." Bloomberg, n.d. Web. 11 Feb. 2014.

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