1.

Draw a clear line of demarcation between Capital and Wealth. Mention the point of differences between Land and Capital.

Answer»

Difference between Capital and Wealth: 

Capital is that part of the wealth that is used for the production of further wealth. Thus, “all wealth is not capital, though all capital is wealth.” Professor Benham and Fisher do not find any difference between wealth and capital because both are used for production and consumption. According to these scholars, all wealth is capital because the direct effect of goods is on production of wealth. The only difference lies in use. If, for example, a car is bought for excursions and enjoyment, it is not capital, but if it is bought for doing business, it is capital. Differences between Land and Capital

LandCapital
1. Land is a free gift of nature.1. Capital is formed through human efforts, i.e., it is a ‘produced’ agent of production.
2. Land lacks mobility.2. Capital is fairly mobile.
3. The supply of land is fixed and limited in the area. In the event of fluctuations in rent, its supply cannot be increased or withdrawn.3. Supply of capital can be increased or decreased with human efforts.
4. Rent of land varies.4. Income from capital is more or less uniform.
5. Land is a permanent factor of production and indestructible. Land does not depreciate or wear out.5. Capital is perishable and becomes completely worn out and the same needs to be replaced.


Discussion

No Comment Found

Related InterviewSolutions