Question

A company decides to replace some of its manual labor with automated machines.
How does this decision reflect the relationship between labor and capital in the production process?


Capital is being used to enhance labor efficiency, reducing the need for human effort.


Labor is being replaced because it is no longer considered a factor of production.


Labor and capital are interchangeable and always produce the same results.


Capital is being eliminated to increase reliance on labor.

Answer 1

The most accurate statement reflecting the relationship between labor and capital in the production process in this scenario is:

**Capital is being used to enhance labor efficiency, reducing the need for human effort.**

This indicates that the company is investing in automated machines (capital) to improve productivity and efficiency. While the need for manual labor may decrease, this decision does not imply that labor is irrelevant; rather, it suggests a shift in how labor and capital interact within the production process. The investment in capital aims to create a more efficient system that integrates both labor and technology.