Capital intensive technique would be chosen in aalabour surplus economy where the relative price of capital is lowerbcapital surplus economy where the relative price of capital is lowercdeveloped economy where technology is betterddeveloping economy where technology is poorCorrect answer is option ‘B’ Can you explain this answer? EduRev CA Foundation Question

Program Evaluation and Review Technique .— The basic concept of PERT requires concise visualization of all the individual tasks to completes a given project. These are classified as “events”, stages of completion, and “activities”, placed in sequential order, and various time estimates are prepared for each activity. The sequence in which the activities are scheduled to be performed creates ” paths “, from the beginning to the end of the project network. The time required by the paths is determined by totaling the time for each activity along the path. The most significant results of the calculation involved with PERT are the determination of a ” critical path ” and ” slack time ” for the network.

  • Third, the resources are efficient and fully employed.
  • In view of all these considerations, we regard the rate of development indicated in the graph as not only the minimum that the community will have to aim at over the next few quinquenniums but as something which must be exceeded.
  • In the initial stages of development, divergence in the economic and social interests of different sections of the community may create special problems.
  • The above ratios, compared from year to year, provide useful information for judging the financial performance of the Railways.

In English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free. Further, the analysis brings out the fact that despite being labour intensive in nature, the labour productivity of manufacturing MSMEs is significantly low compared to large firms. TFP, which is an indicator of technical progress, also exhibits a sharply declining trend for manufacturing MSMEs in recent years. In addition, not only has there been a structural shift in the output composition of the MSME sector towards more capital-intensive industries, there has also been a possible replacement of labour with capital in major labour-intensive industries within MSMEs. All these facts suggest that instead of solely emphasising on the labour-intensive production process of MSMEs, policies should be designed such that the sector achieves its efficient scale of production and dynamism.

Production Possibility Curve

Indi ;n enterprise has made considerable headway, and the country has now considerable experience in the fileds of modern business, industry and finance. New economic and social relations have emerged, giving rise in turn to a general desire for more rapid change. But the development that has taken place is partial and limited when judged in terms of the country’s needs and potentialities. Industrialism and the use of modern techniques have affected only limited segments of the economy. Agriculture is still the mainstay of life for about 70 per cent of the population, and productivity in this sector is exceedingly low. The size of agricultural holdings has progressively diminished ; the old cottage and small-scale industries have been decaying, and the rural population which constitutes about 83 per cent of the total suffers from chronic underemployment and low incomes.

What factors affect prices?

  • Costs and Expenses.
  • Supply and Demand.
  • Consumer Perceptions.
  • Competition.

Capital intensive method of production refers to a business process or industry in which the proprtion of capital required is more in comparison to labour. Labour intensive technology of production refers to the technique in which more labour per unit of output is used. On the other hand capital-intensive technology uses more capital per unit of output. Production possibility curve is also known as Production Possibility Frontier or Production Possibility Boundary. It shows alternative possibilities of two goods that can be produced with the usage of the given resources and techniques of production.

What are Labour intensive jobs?

Responses of individuals or of groups of individuals and of classes cannot always be predicted in advance. Even if the conceptual relationships between different aspects of the phenomena under study are clearly understood, there is often the lack of precise statistical data on which to base an assessment of the requirements of a given situation. It follows that a considerable part of the planning authority’s task is to assess the significance of some of these indeterminate or partially known factors at work in the life of the community and to recommend policies on the best judgment available. While many labor-intensive jobs require low levels of ability or schooling, this isn’t true of all labor-intensive positions. For the underdeveloped and creating economies, labor intensive business structure could be proved to be a better choice than a capital intensive one for a fast economic growth . For the countries, which are not rich and generate low level of revenue, labor intensive trade can bring financial progress and prosperity.

  • Capital Intensive Industry refers to that trade, which requires substantial amount of capital for the production of products.
  • One of the most crucial problems of the economy is to decide which commodities shall be produced for which sections of society.
  • It arises because people have unlimited desires but the means to satisfy that desire is limited.
  • This also implies that small changes in sales can lead to huge adjustments in income and return on invested capital.
  • While many labor-intensive jobs require low levels of ability or schooling, this isn’t true of all labor-intensive positions.

No, production will take place on PPC, if the resources are either underutilised or inefficiently utilised or both. In such case, production will take place on any point below the curve AB, like point H. Any point below the PP curve, thus highlights the problem of unemployment and inefficiency in the economy. 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. It implies the production is taken into a ratio where percentage of capital used is much high than the use of labour.


Name any three variables of macroeconomics. Give two examples of underutilisation of resources. State two features of resources that give rise to an economic problem.

  • Use, such ratios do not have the highest regard, at least not for reliability, but one ratio, return on capital, has achieved extreme and diversified recent application .
  • How to produce refers to a problem in which decision regarding which technique of production should be used is made.
  • Even conceptually, these, relationships are very complex.
  • Doubling per capita consumption does not, for instance, mean doubling of cereal consumption.

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.

Answers and Solutions

Under these conditions, the greater the responsiveness of the party in power to trends of opinion outside, the greater will be its effectiveness for action. The smooth functioning of the party system rests on an underlying agreement as to objectives, though there may be differences as to approach or to the pace of change with reference to certain problems. These differences are a necessary concomitant of democracy ; they ensure a continuous re-examination and re-adaptation of governmental policies. The rights of free expression of opinion and of reedom of organisation inhere in the very concept of government by consent.

capital intensive technique refers to

It has to make a choice between different goods and services. How do ‘Choice of Technique’ and ‘Nature of Business’ affect the ‘Fixed Capital’ requirements of a company?

Distinguish between labour-intensive and capital-intensive technology of production.

Two advantages of capital intensive policy is that they dont have to satisfy giant payrolls, and there is a practically fixed fee of productiveness. Capital Intensive Industry refers to that trade, which requires substantial amount of capital for the production of products. Labor prices encompass the entire prices necessary to secure the human capital needed to complete work. These costs rms margin exceeds can embody funds directed towards base wages, along with any benefits that could be given. Because labor prices can be adjusted throughout market downturns via layoffs or reductions in benefits, labor-intensive industries have some flexibility in controlling their bills. Labour intensive technique promotes employment whereas capital intensive technique promotes efficiency and growth.

capital intensive technique refers to

During the period of the present Five Year Plan, considerable progress will have been made in expanding irrigation, power, basic industries, transport and other services and these will provide, directly as well as indirectly, new avenues of employment. After the five year period, the pattern of priorities may to some extent change, but since aggregate investment will be continually stepped up, employment opportunities will expand rapidly. Through progressive increase in irrigation facilities, the scope for double-cropping will be enlarged and seasonal unemployment will diminish. Rural electrification will open up prospects for the establishment not only of large scale but also of cottage and small scale industries. As commodity production goes up, the scope for employment in services will also grow.

The graphic representation of the same will form a curve showing the different possibilities of production with the given resources and technology. Any point outside the boundary line of the production possibility curve will represent , unattainable combination of output of the two goods. The use of capital intensive technology increases per capita profit or income of production unit. Macroeconomics is the part of economic theory that studies the economy as a whole, such as national income, aggregate employment, general price level, aggregate consumption, aggregate investment, etc. Priority will no doubt go to such external investment as is available from institutions organised on an international basis.

Precisely for the reason that the development of a country is a somewhat long-term process, the institutional and other factors which affect it can be changed to the desired extent and in the desired direction through conscious effort. Moreover, a programme of development even for the short period would fail to have direction and perspective unless it is in some way linked to certain long-term targets and objectives relating to the kind of economy and social framework which it is proposed to evolve. While developmental planning, as stated above, is an all embracing process, which cannot be compartmentalised, the accent of endeavour under present conditions in India has to be on economic development.

What increases demand?

The demand for a good increases, if the price of one of its complements falls. The demand for a good decreases, if the price of one of its complements rises. The demand for a normal good increases if income increases. The demand for an inferior good decreases if income increases.

Industrial development naturally requires more capital, but here too there are differences from country to country depending on the capital intensity of the industries concerned. Before the War, for instance, capital per occupied person in manufacturing industry was about three times as high in Canada as in Australia, while in the realtively more undeveloped countries of South Eastern Europe it was a quarter to a third less than even in Australia. As development proceeds, external economies also become more evident, and this has the effect of reducing the amount of capital required per unit of output. The capital-output ratio also depends in a given period on the extent to which installed equipment in industry and transport is utilized ; if it is used more intensively, say by multiple shift working, the output as a proportion of the capital invested would naturally tend to be greater than otherwise.