Question

Distinguish between Physical Capital and Human Capital.

Answer 1

Aspect	Physical Capital	Human Capital
Definition	It refers to tangible, man-made resources used in production.	It refers to the skills, knowledge, and abilities of individuals.
Nature	Material and tangible (e.g., machines, buildings).	Intangible (e.g., education, training, health).
Formation	Created through investment in machinery, tools, and infrastructure.	Created through investment in education, healthcare, and skill development.
Depreciation	Wears out over time and requires maintenance or replacement.	Does not depreciate like physical assets but improves with time through experience.
Mobility	Less mobile, as machines and buildings cannot move freely.	Highly mobile, as skilled individuals can migrate for better opportunities.
Contribution to Economy	Increases production efficiency by improving infrastructure.	Enhances productivity and innovation in the workforce.
Examples	Machinery, tools, factories, buildings.	Education, skills, training, experience.