Question

What is meant by physical capital ? What are 2 types of physical capital ? Write the main features of each with example

Answer 1

Answer:

Physical  capital, i.e. the variety of inputs required at every stage during production.

(a) Tools, machines, buildings: Tools and  machines range from very simple tools  such as a farmer’s plough to  sophisticated machines such as generators, turbines, computers, etc.  Tools, machines, buildings can be used  in production over many years, and  are called fixed capital.

(b) Raw materials and money in hand:  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. Raw materials and money in hand are called working capital.  Unlike tools, machines and buildings, these are used up in production.

Answer 2

Here is your answer..

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.

Physical capital is divided into two types they are:
I) Working Capital : Raw materials and money at hand are called working capital.
II) Fixed Capital: Tools, machines and building etc. are called Fixed Capitals.

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