To calculate physical capital for the small island economy based on the fishing industry, we need to look at the relevant financial data from the two years provided in the table.
Physical capital refers to the stock of equipment, buildings, and machinery that are used to produce goods and services. In the context of a fishing economy, this could include boats, fishing nets, processing facilities, and other equipment necessary for the fishing industry.
Assuming the table gives you details such as the total output of fish, investment in infrastructure, and depreciation of existing capital, you can use the following formula:
- Physical Capital = (Output from the previous year + Investment) – Depreciation
To find the physical capital for each year, plug in the values from your table into this formula. If we assume that in Year 1, the output was 100 units, the investment was 20 units, and depreciation was 10 units, the calculation for Year 1 would be:
- Physical Capital = (100 + 20) – 10 = 110 units
Repeat this process for Year 2 using the values given in the table for that year. By maintaining accurate records of investment and depreciation, you can effectively compute the physical capital for each year, giving insight into the health and capacity of the fishing industry on the island.