Question

If increasing physical capital increases productivity, why would a company not buy newer, faster computers for all its workers every year?

Answer 1

Answer: it would be too large of an unnecessary expense

There are different resources or factors of production needed by the company. Human capital and physical capital like faster computers are some of them. Buying new computers for all workers will really increase productivity but it would be too large of an unnecessary expense if their specific jobs do not require them and also computers become obsolete in 3 years time.