Question

Explain the term physical capital ? Mention it's different types with examples

Answer 1

Answer:

Physical Capital is the variety of inputs required at every stage during production.

Physical Capital is of two types:

(i) Fixed Capital: Tools, machines and building etc. are called Fixed Capitals. Tools and Machines ranged from very simple tools such as farmer's plough to sophisticated machines such as generators, computers, etc. They are called fixed as they can be used for many years.

(ii) Working Capital: production requires a variety of raw materials such as the yarn used by the weaver and the clay used by the potter. Also, some money is always required during production to make payments and buy other necessary items. In this way, raw materials and money in hand is called working capital.