Capital is the man-made factors for producing wealth. It includes factory, machine, equipment, raw materials, etc. Capital is divided into human capital and physical capital. The educated and skilled manpower are called human capital and material goods are called physical capital. According to Marshall, “Capital consists of those kinds of wealth, other than free gifts of nature, which yields income.”
Characteristics of capital:
Capital is a man-made factor of production through accumulation or saving out of their income that helps in production.
Capital is the most mobile factor of production which can easily be taken from one place to another.
Capital is a passive factor of production. Human force is essential to utilize it. It remains passive without the aid of labor.
Capital is temporary as it is perishable. There occurs wear and tear in the machines and need to be replaced.
5. Flexible in supply:
Since capital is a man-made factor, its supply can be reduced or increased according to the requirement.