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Question : 7
Total: 15
What are capital goods ? How are they different from consumption goods?
Solution:
Difference between capital goods and consumption goods is :
| Consumption Goods | Capital Goods |
|---|---|
| (i) Goods which are consumed for their own sake to satisfy current needs of the consumers directly are consumption goods. | Capital goods are fixed assets of producers which are repeatedly used in production of other goods and services. |
| (ii) These are used for achieving satisfaction. | These are used for generating income by production units. |
| (iii) Consumption goods meet the basic objective of an economy i.e. to sustain the consumption of entire population of the economy. | Capital goods are producer's goods which are repeatedly used in production process for generating income. |
| (iv) For example - Food, shoes, retailers, barbers etc. | For example - Machine, tools, technology etc. |
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