Distinguish between fixed physical and human capital
Answers
Physical Capital refers to one of the factors of production which can also be called inputs of production such as machinery, buildings, or computers. The ownership of physical capital is a result of planned and conscious decision of the entrepreneur.
Human capital refers to the knowledge, attributes, personality and more importantly the set of skills a worker possesses which contributes to economic growth. The concept of human capital further explains that that not all labor is equal and their quality standards can be enhanced by investing in them.
Differences between physical and human capital are:-
-Physical capital is a tangible asset which can be seen and touched whereas human capital is an intangible asset which cannot be seen or touched.
-Physical capital is trad-able in the market whereas only the services in human capital are trad-able.
-Physical capital is separate from its owner whereas human capital is inseparable from its owner.
-Physical capital is shown in the balance sheet whereas human capital is not shown in the balance sheet.
- Physical capital faces restriction on mobility due to trade barriers whereas human capital restriction occurs out of nationality and culture.