Answer to Question #42384 in Economics for Kyler

Question

Factory is under (Land or Capital)?
Explain why.

If it is Capital, where would the Factory be?(You have no Land to begin with or is the Land rented?)
If it was Land, how would you get the Factory in the first place?
(Was the Factory there when you bought the land?)
Land would be a subset of Capital because you need money to buy or lease the Land.
Labor would be a subset of Capital because you need to pay the employees salary which is under expense in Accounting.
Eventually, everything is in Capital.(Also known as money)

I find it difficult to answer this question with these factors.

My lecturer told me that the answer is Capital, however, I think its both Land and Capital(eventhough the question told me that I can only put one answer.

What do you think?

Answer 1

Factory is under Capital. It is also properly accounted for as a Capital value, not a Land value. The Land value does not stem from the creation of new structures, plant or equipment, but by the preservation of an irreproducible bounty handed down to us from previous generations. Irreproducibility and inheritance are the essential features of land in classical economics.