Question

Which of the following would not be classified as a capital resource? a. The Empire State Building. b. A Caterpillar bulldozer. c. A Macintosh computer. d. 100 shares of stock in General Motors.

Short answer

Option d, 100 shares of stock in General Motors, would not be classified as a capital resource because it represents an investment in the company rather than a direct contribution to the production of goods and services.

Step-by-step solution

Option a: The Empire State Building

The Empire State Building is a commercial building, which houses offices and serves as a place where various businesses operate. As it is used in the production of goods and services, it would be classified as a capital resource.

Option b: A Caterpillar bulldozer

A Caterpillar bulldozer is a piece of heavy machinery used in construction, mining, and other industries for various tasks, ultimately helping in the production of goods and services. Thus, a Caterpillar bulldozer would be classified as a capital resource.

Option c: A Macintosh computer

A Macintosh computer is a piece of technology that is commonly used in various industries to perform tasks, such as data analysis, document creation, and website design. As it aids in the production of goods and services, a Macintosh computer would also be classified as a capital resource.

Option d: 100 shares of stock in General Motors

100 shares of stock in General Motors represents an investment in the company rather than a direct contribution to the production of goods and services. Owning shares in a company provides the shareholder with a portion of the returns generated from the company's operations, but it doesn't necessarily contribute to the actual production process. Therefore, 100 shares of stock in General Motors would not be classified as a capital resource. Thus, the correct answer is: d. 100 shares of stock in General Motors.

Key concepts

Production Factors

Production factors are the essential inputs needed to produce goods and services. These inputs fall into three broad categories: land, labor, and capital. Land refers to natural resources, labor includes the human effort involved in production, while capital encompasses the tools and equipment used. Without these factors, production would not be possible.
Capital resources, specifically, are man-made assets such as machinery, buildings, and technology. They are unique because they can enhance production efficiency.
For example:

• A tractor is a capital resource that allows a farmer to plow a field more efficiently than by hand.
• A factory building provides shelter and space for manufacturing processes.
• Computers assist in various tasks across different industries, improving productivity.

Understanding these factors provides clarity on how they interact, making it easier to identify what constitutes a capital resource.

Investment vs Capital

Investment is often confused with capital, yet they serve different roles in economics. Investment refers to the act of allocating resources, usually money, to generate future income or profit. It involves purchasing assets that are expected to grow in value or produce returns over time. Buying shares of stock, like those in General Motors, exemplifies investment.
In contrast, capital resources are the physical tools and facilities used in production. Unlike shares, they are actively utilized in creating goods or offering services. These include factors such as:

• Machinery, like a bulldozer, used in construction.
• Technology, such as computers, employed in business operations.
• Buildings, like office towers, where people work and interact with clients.

Grasping the distinction between investment and capital aids in understanding their respective impacts within economic activities.

Goods and Services Production

The process of producing goods and services is an intricate cycle, combining various inputs to create outputs that fulfill consumer needs. This process ties closely with the usage of production factors. By utilizing capital resources, businesses can increase their production efficiency. For instance, a bulldozer on a construction site can clear land much quicker than manual labor, demonstrating the direct link between capital resources and production output.
Goods, such as electronics and clothing, result from manufacturing, while services include intangibles like consulting and education. The success of these products relies heavily on effectively employing production resources.
Recognizing how these resources operate highlights their importance in maintaining the flow and advancement of economic activities.