Which of the following demonstrates human capital and physical capital in that order?

• A. Raw materials and a warehouse
• B. A skilled engineer and a factory machine
• C. A bank loan and a computer
• D. A plot of land and a tractor

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the definitions of human capital and physical capital. Human capital refers to the skills, knowledge, and experience possessed by an individual, which can increase productivity. Physical capital refers to tangible, man-made goods used in production, such as machinery, buildings, and equipment.
2. Step 2: Identify which items in each option represent human capital. Look for elements related to skills, education, or labor quality (e.g., a skilled engineer).
3. Step 3: Identify which items in each option represent physical capital. Look for tangible assets used in production (e.g., factory machines, warehouses, tractors).
4. Step 4: Match the order requested in the question: first human capital, then physical capital. For example, in the option 'A skilled engineer and a factory machine,' the skilled engineer is human capital and the factory machine is physical capital.
5. Step 5: Verify that the chosen option correctly follows the order and definitions, distinguishing it from other options that may contain raw materials, loans, or land, which do not fit the definitions of human or physical capital in the specified order.