Hi friends, in today’s article we are going to know about Capital Intensive Technique (Labour Saving), merits and demerits. So let’s discuss in details.
Table of Contents
Capital Intensive Technique with Diagram
Capital intensive technique is a technique in which comparatively larger amount of capital is used against smaller amount of labour. This technique is also known as labour saving technique.
The above figure shows the impact of capital intensive technology. Here OK amount of capital and OL amount of labour produces the output level denoted by isoquant IQ.
The higher the isoquant IQ1 shows larger output which produced by using OK1 amount of capital and OL amount of labour. Thus it is clear that higher the level of output is produced by using more capital and less labour.
Merits of Capital intensive technique
- Capital intensive technique raises skill and efficiency of other factors of production.
- The use of Capital intensive techniques will create larger employment opportunity in the long run.
- With the help of Capital intensive technology a country can develop its socio-economic overhead facilities rapidly.
- The use of capital intensive technology increases per capita profit or income of production unit.
Demerits of Capital intensive technique
- It requires larger capital resources, hence it is not suitable for capitally poor countries.
- This technology can not solve short run unemployment problem.
- The use of Capital intensive technology increases the initial cost of production because it requires huge investment on imports.
- Without proper skill and basic facilities a country can not apply capital intensive technology.
So friends, this was the concept of Labour Intensive Techniques. Hope you get the full details about it and hope you like this article.
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