Which statement demonstrates investing in physical capital to increase productivity?

• A. A business hires additional employees to meet rising demand.
• B. A factory purchases new automated machinery to speed up production.
• C. A firm launches a marketing campaign to attract more customers.
• D. A company offers training programs to improve worker skills.

Answer: (B)

Verified step by step guidance

1. Understand the concept of physical capital: Physical capital refers to tangible, man-made resources used in production, such as machinery, tools, buildings, and equipment.
2. Identify which options involve investment in physical capital by looking for actions that involve acquiring or upgrading physical assets that directly enhance production capacity or efficiency.
3. Analyze the option 'A factory purchases new automated machinery to speed up production' as it clearly involves buying physical equipment, which is a direct investment in physical capital.
4. Contrast this with other options: hiring employees is increasing labor, marketing campaigns are related to demand and sales, and training programs improve human capital (skills), not physical capital.
5. Conclude that the statement about purchasing new automated machinery best demonstrates investing in physical capital to increase productivity.