In which of the following situations would a firm be more likely to rely on a capital-intensive method of production?
A)When the rate of technological innovation is low.
B)When capital is relatively expensive.
C)When the firm's output cannot be produced using the assembly line method of production.
D)When labor supply is limited relative to the available amount of capital.

Question

Quizplus · Accepted Answer

When labor supply is limited relative to the available amount of capital, firms tend to rely on capital-intensive methods of production. In this situation, the cost of hiring additional labor would be high, and it would be more cost-effective to invest in capital equipment and machinery.

In Which of the Following Situations Would a Firm Be