In economics, what is capital defined as?

Capital in economics refers specifically to the human-made tools, machinery, buildings, and equipment used in the production of goods and services. This definition emphasizes that capital is not a naturally occurring resource but rather a product of human ingenuity and investment, enabling the production processes to be more efficient and productive.

C clearly identifies capital as these physical assets, distinguishing it from other factors of production such as land (natural resources) and labor (the contributions of the workforce). In the context of production, capital can range from simple tools to complex machinery and infrastructure that enhance the ability to produce goods or services.

Understanding capital as human-made tools also highlights its role in driving economic growth. Investment in capital allows businesses to improve efficiency, increase output, and create a higher level of economic activity. This aspect is crucial in discussions about productivity and economic development.

In contrast, the definitions considering natural resources or workforce contributions do not capture the specific characteristics of capital in economic terms. Similarly, the notion of managing resources and risks is more aligned with principles of economics and managerial practices rather than the definition of capital itself.