QUESTION: Which of the following is an example of a capital resource? Coal, Machinery, Time, Horse
ANSWER : The correct answer is MACHINERY.
Here’s an explanation of why machinery is an example of a capital resource:
Machinery is considered a capital resource because it is a tangible asset used in the production of goods and services. Capital resources are typically man-made tools, equipment, or assets that aid in the production process, and machinery perfectly fits this definition.
Machinery includes a wide range of mechanical devices and equipment used in various industries, such as manufacturing, agriculture, construction, and more. These machines play a crucial role in enhancing productivity, increasing efficiency, and improving the quality of goods produced. They require an initial investment but contribute to the long-term production capacity of a business or industry.
For example, in a manufacturing plant, machinery like assembly line robots, conveyor belts, and precision CNC machines are essential for automating processes, reducing labor costs, and increasing output. Without machinery, many industries would struggle to produce goods at the scale and quality required to meet market demands.
While coal, time, and horses each have their significance in various contexts, they do not fit the definition of capital resources in the same way that machinery does:
- Coal: Coal is primarily considered a natural resource because it is mined from the earth. However, it can become a part of the production process when used as a fuel source in industries like energy production. In such cases, it becomes an input resource but not a capital resource.
- Time: Time is an intangible concept and not a physical asset. It’s crucial for effective resource management and production scheduling, but it is not a capital resource itself.
- Horse: Horses were historically used as a means of transportation and labor in agriculture and industry. While they were valuable assets, they are not typically classified as capital resources in modern economics, as they are living beings and do not fit the traditional definition of capital assets.
