Capital in production

Capital is wealth set aside to produce more wealth: machines, buildings, vehicles and the money to run them. It lets a business do work people could never finish in time by hand, like drilling for oil and gas under the sea off Trinidad. Paper 1 asks which capital pays for day-to-day running in most years.

By the end of this page you can

• Explain the role of capital in production
• Tell fixed, working and venture capital apart
• Compare capital-intensive and labour-intensive production
• Classify a business’s items as fixed or working capital

Goals tick themselves off as you try the activities below.

Photo: GuavaTrain, CC0, via Wikimedia Commons. Cropped, the ship’s name blurred, resized, JPEG q72.

Deep-sea drilling needs enormous capital: no team of workers could reach the gas by hand.