KWL on consumer goods and capital goods

K                   What I know	W           What I want to know	L                What I learned
Write the information about what you know in this space	Write the information about what you want to know in this space.	After the completion of the lesson or unit, write the information that you have learnt in this space.
-          If want consumer goods, one have to sacrifice capital goods, vice versa. -          PPC is a curve showing the various combinations of the maximum quantity of 2 outputs that an economy can produce within a specified period of time with all its resources fully and efficiently employed, assuming  a particular state of technology.	-          What are consumer goods and capital goods meant for? -          How a PPC does shows scarcity?	-          Consumer goods are meant for final consumption while capital goods are used to produce consumption goods in the future. -          The PPC is a boundary: it is a curve that shows the limit of what an economy can produce with a given amount of scarce resources. Anything beyond the boundary cannot be produced because there are not enough resources available. This is how it shows scarcity. -          Choosing to produce capital goods or consumer goods would have a different effect on the economy, as capital goods would benefit the economy in the long run, as it will shift the PPC to the right, allowing for more goods to be produced in the future. However, consumer goods would satisfy consumers for now, but would not have a long term effect on the economy which means that it would not benefit us in the long run.    -

 

Capital goods VS consumer goods

Question: The choice between investing in capital goods and producing consumer goods now affects the ability of an economy to produce in the future. Using at least one example of such economics, explain this statement.

A choice is when an economy has to decide how to use its scarce resources to attain the maximum possible satisfaction of the consumers. In economics, we suppose that a decision maker is rational/knowledgeable economic rationality of decision maker implies the following: what to produce, how to produce and for whom to produce.

What to produce: This is the decision on the type of good and how much of each good to produce. This depends on what the society wishes to consume.

Capital goods: They are man-made aid to production. They are used to produce consumption goods in the future but not bought for immediate or final consumption. For example, machines. But, they ultimately produce consumer goods.

Consumer goods: They are bought for final consumption.

How to produce: This is a decision on the technology or method of production. For example, the producers can decide on whether to use labour-intensive or capital-intensive methods to produce a good. The main aim is to use the least cost method and to maximise the profits of the producers.

For whom to produce: This is a decision on the distribution the produced goods and services among groups within the society once they have made. But generally, the choice to decide who to produce for is basically seen by the one that pays the highest price.

An example of a consumer good is a pizza because it is sold directly to the customer and it is then consumed. Capital goods, on the other hand, are products that are not directly consumed, but are used to create other products. Businesses and individuals use capital goods to help with the production of other consumer products

From this PPC, we can see how the various points represents the various combinations that can be produced with efficient use of all the resources. A decision to produce at any of these points would represent a choice. The point chosen will depends on the economy's priorities and/or preferences.

 

 

 

Avendus, Zodius team up to invest $500 million in tech companies

The investments will be made in India-centric digital and SMAC firms in late stage or before an IPO over the next 3-4 years

 

 

 

 

       

                

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The fund, to be called as Zodius Capital II, follows an earlier fund called Zodius Capital I which is focused on early-stage investments, a statement said. Photo: Mint

Mumbai: Domestic merchant banker Avendus Capital on Monday partnered with private equity fund Zodius Capital to invest up to $500 million in late-stage technology companies.

The investments will be made in India-centric digital and SMAC (social, mobile, analytics and cloud) companies in late stage or before an initial public offering (IPO) over the next three-four years, a statement said.

The fund, to be called as Zodius Capital II, follows an earlier fund called Zodius Capital I which is focused on early-stage investments, it said.

The new fund will focus exclusively on the technology sector for a shorter investment period of up to two years, it said, adding that investments will be done in three tranches of up to $150 million each.

Courtesy its focus on investing in companies from which it can exit soon, it is also offering a shorter investment cycle of under seven years for the investors as against the normal practice of over ten years.

“We have joined hands at a time when digital and SMAC businesses across the world are eliciting exceptional and rightly deserved investment interest,” Avendus’ co-founder Ranu Vohra said.

Avendus is entering the partnership through its subsidiary Alternate Asset Management. Zodius, which typically ‘develops’ one company every six months, has previously invested in companies like Group FMG, ZyFin, Antuit and Enki Professional, the statement said. PTI

 

From this article, I can see that the basic difference between consumer goods and capital goods is that consumer goods are meant to be bought by consumers and capital goods are bought by companies. Specific differences include the types of items in each category. Capital goods often include machinery and equipment used to produce consumer goods. Capital goods can also include raw materials rather than manufactured items. What I have learnt is that some certain companies or organisations do invest on certain technology which they see potential in them. Some other certain companies invest a lump sum of money to invest on certain technology, which in this case is the capital good in order to have to earn more of the products which is the consumer goods in the future. Whether to invest more of their money on consumer or capital goods, it is definitely up to the companies leaders along with the company's financial state at that time also. What we do know is that in order to invest more on the capital good, we do have to invest little on the consumer goods and vice versa

 

 

 

 

 

In conclusion, investing in capital goods or consumer goods will solely depend on what the consumers want. This is because for example, if we produce more capital goods now will result in less capital goods now. However, having more capital goods will result is lesser capital goods produced. Therefore in the long run, investing in capital goods will be better as it will ultimately produce consumer goods.