It is a word that changes its meaning according to frame of reference. A capital is a financial value of asset such as cash or any resource available in hand according to economic context. In general capital is simply any financial asset that has some effects on an economy.
For example Raj had setup a cattle farm. Definitely his source of income will be selling milk and meat. So anything that Raj initially possess, helps in generating income can be called as asset. Here if Raj has 10 cows before setting up farm, those are his capital.
Deep into: ‘What is Capital?’
Capital can have any form in economics. They are resource at the starting of a business. Capital is a more durable form of resource which can be used to generate income. Some examples are:
- Buildings & Machinery
- Brand name
- Land
- Seeds (in agriculture)
- Any patents
Capital doesn’t produce any wealth, it must be used combining some labor to generate wealth. So if a person can invest more on capital foreseeing the demand then they can produce prosperous wealth.
Characteristic of Capital
- They have property rights
- It can be claimed for ownership
- It can be transferred
- Government regulations are applicable to capital
