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The production function takes the general form Y=f(K, L), where Y is the amount of output produced, K is the amount of capital stock used and L is the amount of labor used.
"Physical" is used to distinguish physical capital from human capital (a result of investment in the human agent)), circulating capital, and financial capital. "Physical capital" is fixed capital, any kind of real physical asset that is not used up in the production of a product.
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