What is capital and how does it work?
In: Economics
Capital is money you use to make money.
* For example, say you are a farmer. You own a tractor, which you use to grow crops. The tractor is capital.
* Now say you sell the tractor for $10,000, that $10,000 is capital. You can use it to buy something that will make you money.
* Now you use the $10,000 to buy an oven. You now use that oven to bake bread, which you sell. That oven is capital.
* Now you sell that oven and use the money to pay tuition at a community college where you learn how to program software. That knowledge is capital. You use that knowledge to program software, which you sell.
Latest Answers