Write in detail about fixed and physical capital.
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Fixed capital is a concept in economics and accounting, first theoretically analyzed in some depth by the economist David Ricardo. It refers to any kind of real or physical capital(fixed asset) that is not used up in the production of a product. It contrasts with circulating capital such as raw materials, operating expenses and the like.
So fixed capital is that portion of the total capital outlay that is invested in fixed assets (such as land, buildings, vehicles, plant and equipment), that stay in the business almost permanently—or at the very least, for more than one accounting period. Fixed assets can be purchased by a business, in which case the business owns them. They can also be leased, hired or rented, if that is cheaper or more convenient, or if owning the fixed asset is practically impossible (for legal or technical reasons).
In economics, physical capital or just capitalis a factor of production (or input into the process of production), consisting of machinery, buildings, computers, and the like. The production function takes the general form Y=f(K, L), where Y is the amount of output produced, K is the amount of capital stock used and L is the amount of labor used. In economic theory, physical capital is one of the three primary factors of production, also known as inputs in the production function. The others are natural resources (including land), and labor—the stock of competences embodied in the labor force. "Physical" is used to distinguish physical capital from human capital (a result of investment in the human agent), circulating capital, and financial capital.[1][2] "Physical capital" is fixed capital, any kind of real physical asset that is not used up in the production of a product. Usually the value of land is not included in physical capital as it is not a reproducible product of human activities.
So fixed capital is that portion of the total capital outlay that is invested in fixed assets (such as land, buildings, vehicles, plant and equipment), that stay in the business almost permanently—or at the very least, for more than one accounting period. Fixed assets can be purchased by a business, in which case the business owns them. They can also be leased, hired or rented, if that is cheaper or more convenient, or if owning the fixed asset is practically impossible (for legal or technical reasons).
In economics, physical capital or just capitalis a factor of production (or input into the process of production), consisting of machinery, buildings, computers, and the like. The production function takes the general form Y=f(K, L), where Y is the amount of output produced, K is the amount of capital stock used and L is the amount of labor used. In economic theory, physical capital is one of the three primary factors of production, also known as inputs in the production function. The others are natural resources (including land), and labor—the stock of competences embodied in the labor force. "Physical" is used to distinguish physical capital from human capital (a result of investment in the human agent), circulating capital, and financial capital.[1][2] "Physical capital" is fixed capital, any kind of real physical asset that is not used up in the production of a product. Usually the value of land is not included in physical capital as it is not a reproducible product of human activities.
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