Need help on this one. Trying to decide between a and b. Sarah wants to invest in capital goods in order to increase the capacity of her Internet Café. Which of the following would qualify as a capital good?
a. bulldozer
b. New computers
c. hammer
d. airplane
Are you clear on what an Internet Cafe is? http://en.wikipedia.org/wiki/Internet_caf%C3%A9
Are you clear on what a "capital good" is? http://en.wikipedia.org/wiki/Capital_good
Which of those four would you find in use in an Internet Cafe?
To determine which option qualifies as a capital good, we need to understand the definition of a capital good. A capital good is a type of durable good that is used in the production of other goods or services. It is an asset that is expected to provide benefits over a period of time rather than being consumed immediately.
Let's analyze the options mentioned:
a. Bulldozer: A bulldozer is typically used for construction purposes and is considered a capital good since it is a durable asset used to build infrastructure.
b. New computers: Considering that Sarah wants to increase the capacity of her Internet Café, new computers would certainly qualify as a capital good. They are durable and essential for providing the service of internet access.
c. Hammer: A hammer is not considered a capital good because it is not used in the production of other goods or services. It is a tool used for manual labor and would fall under the category of consumer goods.
d. Airplane: An airplane is typically not used in the context of an Internet Café. While it is a capital good for the aviation industry, it does not fit the specific scenario of Sarah's Internet Café. Therefore, it would not qualify as a capital good in this case.
In conclusion, both a bulldozer (option a) and new computers (option b) would qualify as capital goods for Sarah's Internet Café, but the other options (c and d) would not.