What Is an Example of Physical Capital?

Every day, goods and services are made in all economies. There are three main factors of production: land and natural resources, human capital, like labour and education, and physical capital. Physical capital is made up of tangible, human-made resources that can be used to make things. Physical capital includes buildings, machines, vehicles, computers, and other tools. It’s one of the three things that go into making something, and it’s a big part of why the economy grows. Read on to learn more about how different types of physical capital can be used to make other goods and services.


A factory building is full of machines that are used for different things. For example, raw materials can be brought to the factory by delivery truck, which is another type of physical capital. At the factory, the materials are put into different machines to be processed. The factory is home to many machines that make things, such as ones that fill liquids, package things, and cut things with lasers.


When computers were invented in the early 1800s, they completely changed the way we live. The idea of a computer didn’t change until the industrial revolution began at the end of the 1800s. Factories use computers to control their machines, like the temperature of the oven and the movement of raw materials from one place to another. This makes production go up, which is a good thing.

Tools, machines, and gear

Not only is physical capital used to store and process raw materials, but it is also used to make other goods and services for the whole economy. For example, trackers are used to help grow crops in agriculture. In the clothing business, a sewing machine is used, while an assembly line is used in the car business. Then, on the free market, these goods and services are sold at a price that everyone agrees on.

You can use machinery and equipment to make tangible personal property to sell, either directly or mostly. This means that the production phase must do something to or change the material to make the product that will be sold. Most of the time means that the machinery or equipment is used more than 50 percent of the time in any manufacturing process. Usually, this is determined by how long it is open.

Tools, parts, and other things

The New York State Department of Taxation and Finance says that you don’t have to pay sales tax on parts, tools, and supplies that are directly and mostly used to make goods and services. Parts are the pieces that go together to make machinery or equipment work. Gears, motors, and saw blades are all examples.

Tools like hammers, drills, and utility knives are instruments that can be used by hand to do a job. Sandpaper, oil, grease, coolant, and welding rods are all great examples of supplies that are used to keep machines running and items that are used or used up in the production process.

Shopping Malls

People go to shopping malls for a lot of different reasons. They are made up of many shops that sell processed goods for a certain price. In these places, there are many companies that rent out large commercial properties to retailers and businesses for a fee. This kind of investment in physical capital leads to greater economic growth and higher productivity.

Joel Gomez
Joel Gomezhttps://www.gadgetclock.com
Joel Gomez is an Avid Coder and technology enthusiast. To keep up with his passion he started Gadgetclock 3 years ago in 2018. Now It's his hobby at the night :) If you have any questions/queries and just wanna chit chat about technology, shoot a mail - Joel at gadgetclock com.

Recent Articles

Related Stories

Stay on op - Ge the daily news in your inbox