Question

Define physical capital. What is the difference between fixed capital and working capital?? Answer needed asap

Answer 1

In economics, physical capital refers to a factor of production (or input into the process of production), such as machinery, buildings, or computers. In economic theory, physical capital is one of the three primary factors of production, also known as inputs production function.

Working Capital refers to the capital, which is used to perform day to day business operations. Fixed capital investments include durable goods, which will remain in the business for more than one accounting period. On the other hand, Working capital comprises of short-term assets and liabilities of the business.