Capital-intensive: which production method uses a high proportion of capital relative to labour?

Capital-intensive: which production method uses a high proportion of capital relative to labour?

• A. Capital-intensive
• B. Labour-intensive
• C. Supply
• D. Market Equilibrium

Answer: (A)

The main idea here is the mix of inputs used in production. Capital-intensive production uses a high amount of capital goods (machinery, equipment, factories) relative to labor. This means fewer workers are needed compared with the amount of machinery, and automation or large upfront investments help boost output per worker. The production approach that uses a comparatively large share of labor and less capital is labour-intensive. The other terms don’t describe input mix: supply is about how much producers are willing to offer at different prices, and market equilibrium is where supply equals demand. So the method that uses capital disproportionately is capital-intensive.

The main idea here is the mix of inputs used in production. Capital-intensive production uses a high amount of capital goods (machinery, equipment, factories) relative to labor. This means fewer workers are needed compared with the amount of machinery, and automation or large upfront investments help boost output per worker. The production approach that uses a comparatively large share of labor and less capital is labour-intensive. The other terms don’t describe input mix: supply is about how much producers are willing to offer at different prices, and market equilibrium is where supply equals demand. So the method that uses capital disproportionately is capital-intensive.