Question

What is a physical capital?What are it's different types?Explain each type.

Answer 1

Physical capital is a primary factor of production. Physical capital refers to any such thing that is required as an input during any stage of production. For instance machinery, tools, raw materials, etc.

Physical capital is of two types:

1. Fixed capital is that physical capital that can be used over and over for several years. Examples include machinery and tools as these can be used in production for many years. Fixed capital calls for one time investment and can be used for long time period.
2. Working capital refers to that physical capital that is used during one production cycle and then needs to be procured again for the next production cycle. For example, raw material for a production process is working capital as once used for producing goods, it needs to be procured again. Similarly, money is working capital as it is needed for every new production cycle.  

Answer 2

Answer:

The two types of physical capital are

Fixed capital - tools, buildings, machines etc

Working capital - Row material, money in hand etc