Final answer:
Productive assets that are physically consumed in operations are natural resources, which includes assets like oil or minerals that are depleted as they are used.
Step-by-step explanation:
Productive assets that are physically consumed in operations are generally those that are used up and can be depleted over time as they contribute to the production process. Examples of such assets include equipment and natural resources. Equipment includes machines and tools that wear down or become obsolete, while natural resources are elements like minerals, oil, or gas that are extracted and utilized, hence being depleted.
While land improvements and land itself are also productive assets, they are not typically consumed in the same way. Land improvements like landscaping can depreciate, but the land doesn’t decrease. On the other hand, natural resources, such as oil or mineral deposits, are indeed used up in production over time and represent the correct answer to the multiple-choice question.
In essence, the fact that these resources are finite and can be exhausted through economic activities categorizes them as physical capital that is consumed. This is different from durables, such as equipment, which, despite being part of physical capital, are not consumed in a literal sense but depreciate over time.
Understanding how productive assets like natural resources and equipment contribute to the production process is essential, as is recognizing their role as components of physical capital that can enhance productivity. Investments in physical capital, whether in the quantity or quality, pay off in higher productivity in the future, much like investments in human capital.