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Can households own capital goods?

  1. Jul 2, 2011 #1
    In standard economics I read that the purchase of a car by a household is considered a consumer good. This is because the car is used for personal purposes and not to increase production. But what about domestic housing? Is this considered a consumer durable for the same reason?
  2. jcsd
  3. Jul 2, 2011 #2
    Define "owns". As I think you intend it, no; by definition the firms hold capital goods, and consumers hold consumption goods.

    But firms buy capital with household savings. The households, then, "own" capital indirectly (with the firm holding it in trust, effectively).
  4. Jul 3, 2011 #3
    Depends on the assumptions of the model. If by ‘standard economics’ you mean the models taught in undergrad econ textbooks then probably no but it depends on what you’re modelling and the assumptions of those models. If you mean whether in real life households can own capital, then yes, for example renting out land/property, deposits in banks, ownership of shares etc. etc.
  5. Jul 21, 2011 #4
    When discussing a residence, I believe the term you are searching for is "capital improvements"? These might include restorations or perhaps equipment that improves the value - such as an air conditioner, on-demand hot water heater, or a central vacuum system.
  6. Jul 22, 2011 #5
    What about this example, a laptop that a consumer buys but then uses to make opensource software or for-profit (contracted) software and uses for household purposes as well?
  7. Jul 22, 2011 #6
    If the computer is used for business purposes - a business tax return will be filed and the computer (along with other office equipment and supplies) accounted for accordingly.
  8. Jul 22, 2011 #7
    Last edited by a moderator: Apr 26, 2017
  9. Jul 22, 2011 #8
    Yes, real estate and stocks are considered capital goods.
  10. Jul 22, 2011 #9
    Stocks (common or preferred) represent ownership - shares in a company - equity. Real estate can refer to either land or buildings.
  11. Jul 28, 2011 #10
    the4thamigo - Was there a specific question or problem that you wanted to adress - we de-railed a slight bit - IMO.
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