Owing to these reasons even the Bhagwati Committee and Venkataraman Committee which were formed to study capital intensive technique refers to recommended using less of mechanization. State any four factors which affects the requirements of working capital of a company. Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning. Explain any four points that highlight the importance of financial planning.

For example, 5 quintals, 10 quintals, or 100 quintals. This problem of ‘what to produce and in what quantities to produce is almost faced by everyone in society. Also, an economy needs to make decisions regarding whether it wants to use its scarce resources to produce consumer goods or producer goods. Also, to what extent should luxury goods be produced in comparison to producer goods?

State any four factors which affects the requirements of working capital of a company.

Let us consider that she can grow either Jowar or wheat. Given that the natural resource i.e. land is limited, she needs to choose whether she wants to use the land to produce Jowar or wheat or both. Once Rita has taken the decision regarding the goods to be produced, she needs to think about the quantity of the crop that she would like to produce.

The developed countries having ample of capital, must adopt the capital intensive technique. The capital intensive techniques are not meant for the underdeveloped and developing countries where the shortage of capital is the biggest hindrance for the economic growth. In under-developed and developing countries, there is acute shortage of capital so using labour intensive techniques will encourage the optimum utilisation of the scarce capital in more important areas of production. Even while preparing plans, India gave more importance to capital intensive production techniques rather than labour intensive techniques.

• Telecommunications, airlines, automobile manufacturing, oil production to name a few.
• Given that the natural resource i.e. land is limited, she needs to choose whether she wants to use the land to produce Jowar or wheat or both.
• Also, the economy may be faced with the question of how many civilian goods and defense goods need to be produced.
• Labour intensive technology of production refers to the technique in which more labour per unit of output is used.
• Capital intensive technique would get chosen in aa)labour surplus economy.b)capital surplus economy.c)developed economy.d)developing economy.Correct answer is option ‘B’.
• The two approaches – Labour-intensive and capital-intensive altogether are not different from each other.

Financial planning is the process of preparation of a financial blueprint of an organisation’s future operations. The objective of financial planning is to ensure that enough funds are available at right time. This technology can not solve short run unemployment problem. With the help of Capital intensive technology a country can develop its socio-economic overhead facilities rapidly. Capital intensive technique raises skill and efficiency of other factors of production.

Labour Intensive goods and services would include food service, hospitality, public education, agriculture (to some extent…but not as it used to be 50 years ago). ‘Capital Intensive’ industries require a greater amount of machinery to produce the product. Telecommunications, airlines, automobile manufacturing, oil production to name a few.

Capital intensive technique would be chosen in a

On the other hand, the Capital Intensive Technique involves more capital and less utilization of labor. For instance, footwear can be manufactured either in factories where a large portion of manufacturing is carried out by machines or by skilled teams of cobblers. These are known as central problems because every society has to face them and look for its solutions. Let us understand these three central problems in detail. Unskilled and inefficient labour and therefore, it is costly in the real sense.

Rate of capital formation also increases by using capital intensive technique. Since the cost of production reduces, quality of produced goods improved causing more demand resulting in higher profit, more saving and higher investment and higher rate of capital formation. In such a condition India should have adopted labour intensive production techniques to grovide employment at a large scale.

Capital-intensive techniques in the field of production will lead to more production, increase profit, more saving and investment and more capital formation and accelerate the rate of economic growth. Option B is the correct answer because capital surplus economies have a lower relative price of capital. This means that the cost of borrowing money or investing in capital is lower in these economies, making it more attractive for firms to invest in capital-intensive techniques. In contrast, labour surplus economies have a higher relative price of capital, which means that the cost of investing in capital is higher and it may be more cost-effective for firms to use more labour-intensive techniques instead. In a labor surplus economy, there is an abundance of labor and a shortage of capital. Hence, the best-suited technique would be labor-intensive, where labor is cheap and abundant, and capital is scarce.

Capital Intensive Technique with Diagram

Hi, this is Eusub Ali Khan, Author & Owner of KhanStudy.in. I am a Content Writer, blogger and professional web-designer.

Thus it is clear that higher the level of output is produced by using more capital and less labour. In this technique more units of labor in proportion to capital are used in the production process. Capital intensive technique is a technique in which comparatively larger amount of capital is used against smaller amount of labour.

In a capital surplus economy, there is an abundance of capital and a shortage of labor. Therefore, capital-intensive techniques are better suited to such economies. It requires less labor and more capital, which is easily available.

In a developed economy, both capital and labor are equally available. Hence, a balanced technique, which uses both labor and capital equally, is suitable. Such a technique helps to produce goods and services efficiently, which reduces the cost of production and increases profitability. Capital intensive techniques enhance the skills and efficiency of workers which results in the increase of the supply of skilled and efficient labour which results to the rapid economic growth of the country.

Also, the economy may be faced with the question of how many civilian goods and defense goods need to be produced. The problem of what to produce and in what quantities to be produced can be solved by a government that retains the authority to allocate resources in different areas of production. Alternatively, it can be solved based on the preferences of people in an economy and on the price of goods and services available in the market. Labour intensive techniques should be adopted in agriculture and consumer goods industries where larger number of workers are available.

Hence, considerations regarding the socio-economic conditions of a country or market are highly pertinent to this problem. The solution to the problem of how to produce is based on the amount of quantity that needs to be produced for a given level of resources. At the same time, the cost of using a technique to produce goods is equally very important. A producer will use that particular technology which is available at minimum cost. Under the labour-intensive technique though the wage rate is low, but the productivity of labour being low, unskilled and inefficient labour and therefore, it is costly in the real sense. The higher the isoquant IQ1 shows larger output which produced by using OK1 amount of capital and OL amount of labour.

This technique helps to produce goods and services at a large scale, which can be sold in the market for higher profits. In under-developed and developing countries, the wage-rate per unit labour is very low in comparison to developed countries. Under this type of economy, using labour intensive technique provides more production at cheaper rates. Railway, irrigation, roads, construction, public sector, etc. all use capital intensive techniques of production.

Distinguish between labour-intensive and capital-intensive technology of production. Without proper skill and basic facilities a country can not apply capital intensive technology. The use of Capital intensive techniques will create larger employment opportunity in the long run. One of the most crucial problems of the economy is to decide which commodities shall be produced for which sections of society. For instance, essential goods and services are in demand from all sections of society, but only certain sections of society have a demand for luxury commodities. At the same time, choices of goods and services rest on prevalent tastes and preferences in an economy.

According to Gerstenberg, Capital structure refers to “the makeup of a firm’s capitalisation”. It is the proportion of a company’s capital, financed through owners and borrowed funds. In other words, it represents the mix of long-term funds such as equity shares, preference shares, long-term loans, retained earnings etc., in the total capitalisation of a firm. Download the PDF Question Papers Free for off line practice and view the Solutions online.

Such a technique would help to generate more employment opportunities and improve the standard of living of the people. The labour-intensive techniques will tend to raise the income level and the increase in employment, production, consumption, demand, wages, etc. will bring the higher equality among the common people. Capital intensive technique refers to the production process that requires a large amount of capital and less labor.

• This problem of ‘what to produce and in what quantities to produce is almost faced by everyone in society.
• In this technique more units of labor in proportion to capital are used in the production process.
• Explain any four points that highlight the importance of financial planning.
• Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.
• For CA Foundation 2023 is part of CA Foundation preparation.

Theory, EduRev gives you an ample number of questions to practice Capital intensive technique would get chosen in aa)labour surplus economy.b)capital surplus economy.c)developed economy.d)developing economy.Correct answer is option ‘B’. Capital intensive technique would get chosen in aa)labour surplus economy.b)capital surplus economy.c)developed economy.d)developing economy.Correct answer is option ‘B’. Information about Capital intensive technique would get chosen in aa)labour surplus economy.b)capital surplus economy.c)developed economy.d)developing economy.Correct answer is option ‘B’. Find important definitions, questions, meanings, examples, exercises and tests below for Capital intensive technique would get chosen in aa)labour surplus economy.b)capital surplus economy.c)developed economy.d)developing economy.Correct answer is option ‘B’. The two approaches – Labour-intensive and capital-intensive altogether are not different from each other.