It arises because people have unlimited desires but the means to satisfy that desire is limited. Therefore, satisfying all human needs is difficult with limited means. The PPC is a downward sloping curve i.e. from left to right. This is because it indicates that, to increase the production of one commodity, production of another has to be reduced. A technique of production which would maximize output or minimize cost should be used. Whatever the methods used, the basic concepts are based on segretion of cost and revenue, calculation of risk involved, determination of prospective return to the company with or without consideration of the timing of income.

The elimination of poverty cannot, obviously, be achieved merely by redistributing existing wealth. Nor can a programme aiming only at raising production remove existing inequalities. The two have to be considered together ; only a simultaneous advance along both these lines can create the conditions in which the community can put forth its best efforts for promoting development. It is in this larger perspective that the task of planning has to be envisaged. Capital intensive production requires extra machinery, gear and complex technological production systems in the production course of. Capital intensive manufacturing requires a better degree of investment and larger quantity of funds and monetary sources.

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It is necessary to visualise the problem of development over a period of twenty-five or thirty years and to view the immediate five year period in this broader context. In formulating a plan of development for a particular period, an estimate of what is feasible must, no doubt, carry more weight than abstract reasoning as to a desirable rate of growth. But, there is clearly need for looking beyond immediate possibilities and for taking a view of the problem even from the beginning in terms of continuing and over-all requirements, and for preparing the ground in advance.

• Whether an industry or firm is capital or labor intensive depends on the ratio of capital vs. labor required in the production of products and companies.
• But the problem is that which resource should be put to which use.
• It is necessary to visualise the problem of development over a period of twenty-five or thirty years and to view the immediate five year period in this broader context.
• 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.
• The economy moves towards the full employment, thereby removes unemployment.

It leads to huge capital inflow shifting the production possibility curve rightward as shown in the figure. Large number of technical training institutions have been started by the government. State its economic value in the context of production possibility frontier. Explain the meaning of opportunity cost with the help of production possibility schedule. By economic growth, we mean that an economy has developed greater capacity to produce larger quantity of goods by acquiring more resources.

Labour and Capital Intensive Techniques (With Diagram)

The production of products and providers requires labor and capital in varying amounts, relying on the product. If the labor value outweighs the capital value, it indicates that the manufacturing course of is labor intensive. This work force shall comprise fifty five % of unskilled labor, 27 % skilled labor and relaxation the technical and assist workers. Though India has the human resource, it requires coaching in numerous expertise for absorption within the building business.

• There arc a variety of ways in which idle manpower and the spare hours of those partially employed can be canalised into a nationwide programm; of developmental activity.
• In recent years a number of management aids or control techniques have increasingly come into operation and Railway Managers should strive to make themselves familiar with some of these techniques and make use of them for problem solving under given situations.
• Rural electrification will open up prospects for the establishment not only of large scale but also of cottage and small scale industries.
• In total, there are 3 types of production possibility curves.
• The use of Capital intensive technology increases the initial cost of production because it requires huge investment on imports.
• In many of the cases, these low earnings countries undergo from scarcity of capital but benefit from plentiful labor pressure such as some African countries .

With extension of irrigation over large parts of the country, increasing use of fertilisers and better seeds, and the use of power for certain agricultural operations, a new pattern of intensive agriculture which provides a more complete and balanced diet may be expected to evolve. Rising standards of living will also be characterised by greater demand for the secondary essentials of life like education and health facilities, travel, entertainment, etc. A doubling of consumption standards is, therefore, more a question of planning for and meeting changes in the pattern of consumption and in social valuations than of doubling the production of its existing components.

NCERT Solutions for Class 12 Micro Economics Introduction to Economics

For occasion, it is highly unlikely a new aircraft firm would begin operations and compete with the likes of Boeing, because it prices billions in capital to begin producing airplanes. The tourism industry, like many other service industries, is a labor-intensive industry. As such it employs a large number of workers in order to produce its products. Products causes management to operate in a rigid and close supervisory manner. This also implies that small changes in sales can lead to huge adjustments in income and return on invested capital. Companies in capital-intensive industries are often marked by excessive levels of depreciation.

These resources are available in limited quantities in eveiy economy, big or small, developed or underdeveloped, rich or poor. Some economies may have more of one or two resources but not all resources. PPC is concave shaped as production of one good can be increased only by reducing quantity of another good.

Policy implications

By using EBITDA, quite than internet income, it’s easier to match the performance of corporations in the same business. Capital-intensive industries are inclined to have excessive levels of operating leverage, which is the ratio of fixed costs to variable prices. As a end result, capital-intensive industries want a high quantity of manufacturing to provide an adequate return on funding. The data given above are not of a nature which would warrant any firm relationships being deduced between rates of investment and rates of develpment, nor can they be used for making comparisons as between countries or as between widely separated periods within the same country.

The latter may in a sense be regarded as a consequence of intellectual, social and cultural advance. It is true, nevertheless, that economic development of an underdeveloped country cannot proceed far unless the community learns how to get from its resources of men and materials a larger output of commodities and services. Labor-intensive industries include restaurants, hotels, agriculture, and mining. Technological development and economic growth have increased labor productivity, reduced labor intensity, and enabled workers to move into manufacturing and services. Based on analysis of MSME data from various sources for the latest years available in each source, I find that the structure of manufacturing MSMEs has changed significantly in the last decade. Not only has the share of capital-intensive industries within the output composition of manufacturing MSMEs increased, labour productivity remains very low with possible replacement of labour with capital within manufacturing MSMEs.

There is at present a large measure of disguised unemployment in the spheres of services ; the tendency at first will be to eliminate this element of unemployment, but gradually the proportion of the total working force engaged in services will also begin to rise. The elimination of unemployment in an under developed economy is by its nature a somewhat long-term problem which calls for steady and persistent effort. In fact, development is, in a sense, but another name for employment opportunities. The larger the increase in national output aimed at, the greater must be the demand for labour, especially if care is taken to adopt labour-intensive processes to the maximum extent possible. This means that expansion of employment opportunities at rising levels of real income will proceed side by side with the development of the economy and, like the process of development itself, will become cumulative as soon as there is a marked improvement in the technical equipment of the community. It is true that a growing population increases the manpower potential of the country and also has the effect, in some ways, of stimulating investment.

Resources are not equally efficient for production of the two goods. A lot of people die and many factories are destroyed due to floods in a country. The inverse relationship between the use of technology and the use of https://1investing.in/ natural resources. The economy is not at full employment when operating on the PPF. Guaranteeing a minimum level of income for every citizen. State any two central problems under ‘problem of allocation of resources’.

The economy also has to decide the quantity of production. It also enables the economy to decide what products are to be produced and in what quantities. It plays an important role as it shows all the alternative ways to use the economies resources efficiently. The shape of the PPC will also depend on whether there are increasing, decreasing, or constant costs of production.

• No, production will take place on PPC, if the resources are either underutilised or inefficiently utilised or both.
• It is true, nevertheless, that economic development of an underdeveloped country cannot proceed far unless the community learns how to get from its resources of men and materials a larger output of commodities and services.
• There are certain concurrent subjects in which the Centre as well as the States can undertake legislation.
• These calculations, it must be emphasised, are illustrative and are intended to indicate only broadly the implications, in terms of effort and return, of alternative courses’of action.

Through these alone is a vigorous, creative political life possible. At the same time, it is evident that the problems of the modern world are too complex to be dealt with in terms of rival or opposing programmes of action. On various matters, different parties tend inevitably to come together and co-operate. It is through enlargement of the area of agreement that conditions can be created for the most effective mobilisation of the community’s resources towards the common objective of all-round economic development. It signifies that the levels of output would be at a much smaller scale than a labor intensive trade. The prices concerned in a labor intensive production unit could be the costs of coaching and educating workers.

When the line is sloping downwards, it shows that there will be less production of one good and more of the other which will always remain constant. This is because the standard basket valuation curve has a negative gradient. But this type of a curve cannot always be considered and is not realistic as it cannot represent the actual market or the economy.

Certain forms of economic and social organisation are unsuited to or incapable of absorbing new techniques and utilising them to the best advantage. Since capital intensive production depends largely on equipment and tools, such industries require long run funding, with a high price concerned in maintaining and depreciating gear. In such a capital intensive manufacturing course of, it might be very costly to extend output levels as this may require greater funding in such equipment and gear. Labor-intensive industries or processes require large portions of bodily effort to finish necessary duties. In labor-intensive industries, the costs related to securing the mandatory personnel outweigh the capital costs with regard to significance and quantity.