Final answer:
Consumer goods satisfy wants directly and are used for personal satisfaction, while capital goods satisfy wants indirectly by being used to produce other goods and services. Both can be produced by the private or public sector, and capital goods production also adheres to the law of increasing opportunity costs.
Step-by-step explanation:
The basic difference between consumer goods and capital goods lies in how they satisfy wants. Consumer goods such as shoes, backpacks, and cars fulfill desires directly by being used by individuals for personal satisfaction. On the other hand, capital goods like bulldozers or cash registers are used in the production of other goods and services, thus indirectly satisfying wants by facilitating the production process. For example, a factory machine would be a capital good because it produces consumer goods, but it is not directly satisfying consumer needs — instead, the goods it produces, like clothing or electronics, provide that satisfaction.
It's important to clarify a few misconceptions outlined in the question's options. Capital goods and consumer goods can both be produced by either the private sector or the public sector; it is not exclusive to one or the other. The production of capital goods also does not evade the law of increasing opportunity costs. In fact, when an economy invests more in capital goods, it might forgo the immediate production of consumer goods, which could lead to higher future production capabilities and potential growth.