What is the purpose of capital in the production process?

The purpose of capital in the production process is to serve as man-made inputs. Capital refers to the physical assets and tools, such as machinery, equipment, and buildings, that are utilized in the production of goods and services. These man-made resources are essential for converting raw materials into finished products, as they enable businesses to increase efficiency, productivity, and output.

Capital is vital because it represents the investments made into the business that support its operations. Without adequate capital, a business would struggle to purchase the necessary equipment or technology needed to develop and manufacture products effectively. This makes capital a key component in the production process, providing the foundation for all other factors of production, including labor and enterprise, to work together effectively.