physical capital

Examples of physical capital in the following topics:

• Aggregate Production

  • The aggregate production function examines how the productivity depends on the quantities of physical capital per worker and human capital per worker.
  • The aggregate production function examines how productivity, or real GDP per worker, depends on the quantities of physical capital per worker and human capital per worker.
  • The production function relates the physical outputs of production to the physical inputs or factors of production.
  • The average physical product is at its maximum.
  • Stage 2: output increases at a decreasing rate and the average and marginal physical product are declining.

• Changing Worker Productivity

  • In economics and long-run growth, worker productivity is influenced directly by fixed capital, human capital, physical capital, and technology.
  • In economics and long-run growth, worker productivity is influenced directly by fixed capital.
  • Human capital and increased worker productivity are critical because they are different from the tangible monetary capital or revenue.
  • Human capital grows cumulatively over a long period of time.
  • Examine the role of human capital in production and economic growth

• Defining Capital

  • In economics, capital (also referred to as capital goods, real capital, or capital assets) references non-financial assets used in the production of goods and services.
  • It is possible for capital goods to be maintained or regenerated depending on the type of capital.
  • Physical Capital: capital that must be produced by human labor before it can become a factor of production (also referred to as manufactured capital).
  • Interest allows capital to be obtained, while profit is the accumulation of the capital.
  • Social Capital is capital that is captured as goodwill or brand value.

• Role of Financial Markets in Capital Allocation

  • One of the main functions of financial markets is to allocate capital, matching those who have capital to those who need it.
  • One of the main functions of financial markets is to allocate capital.
  • Capital markets especially facilitate the raising of capital while money markets facilitate the transfer of liquidity, matching those who have capital to those who need it.
  • When a company borrows from the primary capital markets, often the purpose is to invest in additional physical capital goods, which will be used to help increase its income.
  • Long-term capital can come in the form of shared capital, mortgage loans, and venture capital, among other types.

• Capital Market

  • A capital market is a financial exchange for the buying and selling of long-term debt and equity-backed securities.
  • A key division within the capital markets is between the primary markets and secondary markets.
  • Money markets and capital markets are closely related, but are different types of financial markets.
  • When a company borrows from the primary capital markets, often the purpose is to invest in additional physical capital goods, which will be used to help increase its income.
  • The NYSE is one of the largest capital markets in the world.

• Defining the Production Function

  • In economics, a production function relates physical output of a production process to physical inputs or factors of production.
  • It is a mathematical function that relates the maximum amount of output that can be obtained from a given number of inputs - generally capital and labor.
  • This production function says that a firm can produce one unit of output for every unit of capital or labor it employs.
  • For example, the firm could produce 25 units of output by using 25 units of capital and 25 of labor, or it could produce the same 25 units of output with 125 units of labor and only one unit of capital.
  • For example, a firm with five employees will produce five units of output as long as it has at least five units of capital.

• Analyzing Intangible Assets

  • Intangible assets are defined as identifiable non-monetary assets that cannot be seen, touched or physically measured.
  • Some costs with respect to intangible assets must be capitalized rather than treated as deductible expenses.
  • For example, an amount paid to obtain a trademark must be capitalized.
  • Certain amounts paid to facilitate these transactions are also capitalized.
  • The regulations contain many provisions intended to make it easier to determine when capitalization is required.

• Determinants of investment

  • In economics, investment is defined as the accumulation of newly produced physical entities such as factories, machinery, houses, and inventories of goods.
  • Firms can buy non-residential capital (buildings, equipment, etc. ) while individual consumers can buy residential capital (houses).
  • Economic investment, also referred to as capital investment, is different from and should not be confused with financial investment.
  • Non-residential fixed investment: The amount purchased per unit time of goods which are not consumed, but are used for future production (capital).
  • An example of non-residential fixed investment is investment in human capital, which includes additional schooling or training.

• The Prevalence of Small Businesses

  • Industries with high concentrations of small and medium businesses generally do not require enormous capital investment up front.
  • Industries with a high concentration of small and medium-sized businesses (SMBs) generally do not require an enormous amount of capital investment up front.
  • For example, it is not likely that you would start a company to build airplanes, as that would take a large investment of capital for property, plant, equipment, and labor.
  • Goods producers make and sell some sort of physical product or material, while service providers don't make tangible goods.
  • This requires a large initial investment of capital and access to low-cost labor, which are both tough for SMBs to access domestically.

• Trade Credit or Accounts Payable

  • Trade credit is the largest use of capital for a majority of B2B sellers; Accounts Payable is money owed by a firm to its suppliers.
  • Trade credit is the largest use of capital for a majority of business to business (B2B) sellers in the United States and is a critical source of capital for a majority of all businesses.
  • Trade credit for Wal-Mart is eight times the amount of capital invested by shareholders.
  • They all benefit from their collaboration to make efficient use of capital to accomplish various business objectives.
  • Payables are often categorized as Trade Payables, payables for the purchase of physical goods that are recorded in Inventory, and Expense Payables, payables for the purchase of goods or services that are expensed.