IGCSE Economics Paper-2: Specimen Questions with Answers 99 - 100 of 100

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Labor intensive industry requires a large amount of labor to produce goods and services. In contrast to capital intensive which requires less amount of labor? Example 10 workers can produce 10,000 products per day.

Question 99 (3 of 4 Based on Passage)

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Short Answer▾

Why some organizations are labor intensive and some are capital intensive?

Explanation

Some Business is Labor Intensive Because of the Following Reasons

  • Labor intensive production requires less amount of capital investment they require relatively high level of labor compared to capital investment.
  • Labor intensive technique can be used to produce specialized or personalized products on a small scale.
  • It requires less amount of capital investment.
  • Importance is given to manual labor in such industries.

Some business use capital intensive technique because:

  • Capital-intensive technique requires a relatively high level of capital investment compared to the labor cost.
  • Capital intensive production technique is highly automated and to be used for production on a large scale.
  • It is associated with flow production but requires heavy and costly equipment.

Question 100 (4 of 4 Based on Passage)

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Short Answer▾

State the difference between capital intensive and labor intensive.

Explanation

Capital intensive and labor intensive are the types of production methods which are used in the production of goods and services. An industry will be labor intensive or capital intensive depends on the ratio of labor and capital required in the production of goods and services.

Capital Intensive and Labor Intensive Are the Types of Production Methods
S. no.Capital-IntensiveLabor- Intensive
1Capital intensive refers to the equipment and machinery, vehicles and so on that businesses use to make a product.‘Labor’ refers to the people required to carry out a process in a business.
2Capital-intensive process refers to the process that requires huge amount of cost as compared to labor costLabor-intensive process refers to the process that requires high level of labor as compared to capital investment.
3These processes are more likely to be highly automated and to be used to produce on a large scale.These processes are more likely to be used to produce individual or personalize products or to produce on a small scale.

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