When a firm builds a new factory, this is an example of an investment in

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BlackTom AI · Accepted Answer

Consider the concept being described: a firm builds a new factory as a form of investment. 
Option 1: the market. This choice is not accurate because building a factory is not about buying or improving the market itself; it concerns the firm's own productive assets rather than a market-level resource. 
Option 2: physical capital. This is the idea that relates to tangible assets used in production, such as factories, machinery, and equipment. Constructing a new factory directly adds to the firm's physical capital stock, enabling ongoing production capacity. 
Option 3: human capital. While human capital—skills, knowledge, and experience of workers—is crucial for productivity, a factory building is a physical asset, not a has-to-do-with workers’ capabilities. The act of erecting a factory does not in itself enhance workers’ capabilities; it expands the plant rather than the workforce’s competencies. 
Option 4: research and development. R&D involves activities to innovate or improve products and processes, typically intangible and venture-focused rather than the construction of a production facility. Building a factory is a capital investment in the plant, not an R&D expenditure. 
Thus, when a firm constructs a new factory, the primary category being enhanced is the stock of tangible productive assets—its physical capital.

When a firm builds a new factory, this is an example of an investment in

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When a firm builds a new factory, this is an example of an investment in

View Explanation

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