Question

The higher the prices of capital relative to the prices of labour, the more production techniques should be ____________.

• A. labour intensive
• B. capital intensive
• C. fixed
• D. labour or capital intensive and we cannot say which without additional information.

Answer 1

The correct option is A labour intensive

Beacause the prices of capital are higher than that of labour hence the technique of production used should be labour intensive.

One major reason behind this would be the production costs would be lesser if such techniques are used.