Which statement demonstrates investing in physical capital to increase productivity? Sanjay, the CEO of animation studio DesignX
, has retired. His successor, Michael, decides to give the company a makeover. To make DesignX more successful, Michael introduces some changes. He believes that projects will be finished faster if work happened round the clock, so he extends working hours to 24 hours by introducing night shifts. He purchases licensed copies of an innovative new animation software. He enters into a contract with a smaller studio for outsourcing smaller projects. He wants his staff to be on par with the best in the industry, so he organizes free training workshops to upgrade the skills of in-house animators.
The answer is: He purchases licensed copies of an innovative new animation software.
Physical capital refers to the capitals that is can be used as primary factors of production. Innovative new animation software can be considered as one of the primary factors because it can dramatically improve the quality of the company's end product and reduce the time needed for the operation.
