IGCSE Economics Paper-2: Specimen Questions with Answers 16 - 16 of 100

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Question 16

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What do you mean by Labor intensive production?

Explanation

Labor intensive production means a production process in which labor cost is the highest component. In Labor intensive production cost of capital has a less contribution in the production process. Labor intensity means the amount of labor used in the process of production. In an economy some industries are labor intensive and some are capital intensive.

These include:

  • Hospital/Nursing: Doctors and nurses are difficult to be replaced with machine.
  • Agriculture: Various types of agriculture products need to be picked by a labor with hand. Not all work can be performed with machine. Example- picking of tea leaves.
  • Retail staff: Service offered by retailers to customers.
  • Teaching: Computers cannot take place of teachers.
  • Niche products: For a firm having specialization in niche market, will have little scope for economies of scale and low fixed costs. In case of niche products, we observe a higher labor-intensive production. When production is done at a large scale, production tends to be more capital intensive.
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