In microeconomics, a capital is a type of resources where a capital item is used as inputs to assist in producing outputs. There are two types of capital: physical and natural capital. Physical capital is a man-made and tangible item used in production. Physical capital includes machine, tools and office buildings. Natural capital is an item found naturally in surroundings such as minerals. It is important to determine capital because capital is a resource that is limited. Being a limited item, we cannot product many outputs as we like.