Capital and Labour intensity

• What are the two factor inputs in production operations?

  Labour and capital
• How can the importance of labour and capital be described?

  In terms of their intensity or significance
• What does labour-intensive production rely mainly on?

  Labour
• What does capital-intensive production rely mainly on?

  Capital
• What are examples of labour-intensive production?

  • Food processing (e.g. ready meals)
  • Hotels & restaurants
  • Fruit farming / picking
  • Hairdressing & other personal services
  • Coal mining
• What are examples of capital-intensive production?

  • Oil extraction & refining
  • Car manufacturing
  • Web hosting
  • Intensive arable farming
  • Transport (airports, railways etc)
• What is a key feature of labour-intensive operations regarding costs?

  Labour costs are higher than capital costs
• What type of costs are mainly associated with labour-intensive operations?

  Variable costs
• What is the breakeven output characteristic of labour-intensive operations?


  Lower breakeven output
• What advantage do firms in labour-intensive operations benefit from?

  Access to sources of low-cost labour
• What is a key feature of capital-intensive operations regarding costs?

  Capital costs are higher than labour costs
• What type of costs are mainly associated with capital-intensive operations?

  Fixed costs
• What is the breakeven output characteristic of capital-intensive operations?

  Higher breakeven output
• What advantage do firms in capital-intensive operations benefit from?

  Access to low-cost, long-term financing