What does a decrease in the capital-labour ratio mean?
A) higher labour productivity, because labour does more work
B) lower labour productivity, because labour works with relatively less capital
C) higher labour productivity, because labour produces less capital and more of other goods
D) lower labour productivity, because more capital is available

Question

What does a decrease in the capital-labour ratio mean?  
A) higher labour productivity, because labour does more work 
B) lower labour productivity, because labour works with relatively less capital 
C) higher labour productivity, because labour produces less capital and more of other goods 
D) lower labour productivity, because more capital is available

Quizplus · Accepted Answer

A decrease in the capital-labour ratio means that there is relatively less capital available for each worker. This would result in lower labour productivity, as workers will have to work with less capital and tools, leading to less efficient production processes.

What Does a Decrease in the Capital-Labour Ratio Mean