If a firm reduces the ratio of capital to labor, it becomes more:
A) labor intensive.
B) output intensive.
C) marginal intensive.
D) capital intensive.

Question

Quizplus · Accepted Answer

If the firm reduces the ratio of capital to labor, it means there is relatively less capital and relatively more labor being used in the production process. This makes the firm more labor intensive, as labor becomes a relatively more significant factor of production compared to capital.

If a Firm Reduces the Ratio of Capital to Labor