Capital can be defined as the resources or wealth made by man that are used for producing further wealth. Capital consists of machinery, tools, buildings, cash, raw materials etc.

Capital can take different forms since it is man-made. Also the use of capital in production increases efficiency and output. It is an artificial factor of production developed from land.

Features of Capital

  • Capital is made by man

  • It can change form

  • The reward for capital is interest.


Entrepreneur is a factor of production which controls, manages, organize and coordinate all factors of production in order to achieve the objectives of the organization.

The entrepreneurial activity is sometimes regarded as a specialized form of labor but is separated as a distinct factor of production. He/she is responsible for the management of the firm. The entrepreneur is the decision maker, risk bearer and organizer of a commercial enterprise. He/she is responsible for determining what to produce, how to produce.

The reward for the entrepreneur is profit.

Functions of Entrepreneur

  • Provision of Capital:- The entrepreneur provides capital for the formation and running of the business.

  • Risk bearing:- He/she is the risk bearer as he gets the credit for success and the blame for the losses or failure.

  • Decision making:- The entrepreneur takes vital decisions affecting the organization. Business decisions lie what to produce and for whom to produce are take by him/her.

  • Management Activities:- He is responsible for the management of the firm in order to achieve the goals and objectives of the organization.

  • Coordinating other factors:- The entrepreneur has a responsibility to co-ordinate all other factors of production to achieve efficiency in the operation of the organization.

  • Determines pricing policy:- The entrepreneur determines the pricing of the products.

  • Organizing Research Activities:- He/She carries out research in order to increase the efficiency and productivity of the business.