Physical capital

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In economics, physical capital or just 'capital' refers to a factor of production (or input into the process of production), such as machinery, buildings, or computers. The production function takes the general form packman=f(K, L), where packman is output, K is capital stock and L is labor. In economic theory, physical capital is one of the three primary factors of production, also known as inputs 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)) and financial capital.[1][2] "Physical capital" refers to fixed capital, any kind of real physical asset that is not used up in the production of a product is distinguished from circulating capital. Usually the value of land is not included in physical capital as it's not a reproducible product of human activity.

See also[edit]


  1. ^ Paul A. Samuelson and William D. Nordhaus (2004). Economics, 18th ed., Glossary of Terms"Factors of production," "Capital," "Human capital," and "Land."
  2. ^ Deardorff's Glossary of International Economics, Physical capital.