CMA Foundation · Fundamentals of Business Economics and Management · Means of Production
Ramesh owns a bakery. He uses his own savings of ₹5,00,000 to buy an oven. In economics, the oven is classified as:
The oven is capital because it is a man-made, produced asset used to produce further goods. It is not land since it is not a natural resource, and it is not enterprise, which means organising production and bearing risk.
- ALand, because it is a physical asset
- BLabour, because it is used with workers
- CCapital, because it is a produced means of production used to produce further goodsCorrect
- DEnterprise, because the owner invested it
Explanation
Capital is man-made wealth used in producing more goods. The oven is a produced instrument of production, so it is capital. Enterprise refers to the organising and risk-bearing function, not the physical asset the owner buys.
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