Question

In: Economics

1. Economists classify all of the following as physical capital, except_______? a. $20.00 bill b. Mc...


1. Economists classify all of the following as physical capital, except_______?
a. $20.00 bill
b. Mc Rotunda building where an economics class meets

c. A photocopier

d. A railroad car
e. A factory

Solutions

Expert Solution

Answer Option A:- $20.00 bill

Explanation: physical capital is one of the important factors of production. Physical capital are manmade and tangible assets helps in the process of production. The physical capital is fixed in nature and they are to be used over a period of time. Therefore the investment on physical capital are considered as fixed cost for business in shortrun. The various example of physical capital are building, machine, equipments and vehicle. As per the question Option B-“Mc Routunda Building where economic class meets” , option C-“A photocopier”, option-D “A railroad car” and option E-“A factory” are the example of physical capital because they are manmade and tangible; moreover they assist directly in the process of production.

Whereas option A-$20.00 bill is not physical capital because it does not satisfy the characterises of physical capital. Moreover it is financial capital not physical capital.


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