Is a house a capital good or a consumer good?

In most scenarios, a house would be a consumer good, because it is purchased primarily for personal use. However, if a house was purchased for primarily business reasons, such as if the buyer wished to create a hotel, the house would be a capital good. 

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The difference between capital and consumer goods lies not in the objects themselves, but in how they are used. A consumer good is purchased for the buyer's own use. A capital good is purchased to be used in the course of business, for the production of more goods or the...

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The difference between capital and consumer goods lies not in the objects themselves, but in how they are used. A consumer good is purchased for the buyer's own use. A capital good is purchased to be used in the course of business, for the production of more goods or the provision of services. If you buy food for yourself at the supermarket, the items you buy are consumer goods. However, the same food purchased for use in a restaurant kitchen would consist of capital goods. A car you buy to transport yourself and your family is a consumer good. The same car purchased for use as a taxi would be a capital good.

It is clear, therefore, that a house purchased to be used as a private dwelling is a consumer good. Economists often divide consumer goods into three categories: durable goods, non-durable goods, and services. Durable goods are those that are intended to last for more than three years, so a house would fall into this category.

It is, of course, possible to run a business from your home, and if the house were to be purchased primarily for business purposes, it would be a capital good. A house purchased for use as a hotel or a restaurant, for instance, would fall into this category.

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