Question

In deciding "How to produce" the economy should consider,
A. Labour intersive Techniques
B. Capital Intensive Techniques
C. Both (a) and (b)
D. Neither (a) nor (b)

Answer 1

Correct Answer - C
C. This problem refers to selection of technique to be used for production of goods and services. A good can be produced using different techniques of production. By ‘technique’, we mean which particular combination of inputs to be used. Generally, techniques are classified as: Labour intensive techniques (LIT) and Capital intensive techniques (CIT). i. In Labour intensive technique, more labour and less capital (in the form of machines, etc.) is used. ii. In Capital intensive technique, there is more capital and less labour utilization.