In economics, the man-made resources such as tools, equipment, and structures that are utilized to produce other goods and services are known as capital goods.
Capital goods are essential for production processes, as they help in the creation of finished products. Unlike consumer goods, which are intended for direct consumption, capital goods are used to produce consumer goods or services. For instance, machinery in a factory, buildings used for manufacturing, and tools used by workers all qualify as capital goods.
Understanding the role of capital goods is crucial for analyzing how economies grow and how production processes are optimized. The investment in capital goods is necessary for increasing productivity and efficiency in the production of goods and services.