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Homework answers / question archive / Write an essay about capital as a production factor including the four types of capital (physical capital, financial capital, social capital and human capital) by giving some examples

Write an essay about capital as a production factor including the four types of capital (physical capital, financial capital, social capital and human capital) by giving some examples

Economics

Write an essay about capital as a production factor including the four types of capital (physical capital, financial capital, social capital and human capital) by giving some examples. According to you which type or types of capital is more productive today when compared with the past?

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Capital can be defined as any finance related resources or assets which are owned by a business organization that are beneficial in boosting growth of the business and also generating revenue. The four types of capital are:

Physical capital :

  • It includes all those inputs required for further production like factory, plant, machinery, raw materials etc.
  • Physical capital is tangible and can be sold easily.
  • Physical capital depreciates with the passage of time.

Financial Capital : These are any resources which are calculated in the aspect of money. Which are used by the business organizations or individuals to satisfy their needs in the production.

Example of financial capital can be investment banking, corporate etc.

Human capital :

  • It refers to the stock of skill, ability, expertise, knowledge that an individual exhibits.
  • Human capital is intangible and cannot be sold within the market.
  • Depreciation in human capital can be reduced by making continuous investments in education and health.

Working capital : This refers to the amount of current assets that a business firm has to maintain for its day to day operations. Net working capital can be calculated by subtracting current liabilities from the current assets. It can be either positive or negative. Payable bills, trade credit, loans etc are examples for working capital.

Human capital is found to be more productive today. Human resources are most important from the point of view of development of an economy. In the modern world, all the planners believe that building of a strong nation depends upon development of people and organization of human activities. If this resource is developed properly, it can do wonders.