Chapter 14: Problem 6

Relative to the Chinese economy, the U.S. economy is (LO2) a) more capital intensive b) more labor intensive c) more labor intensive and more capital intensive d) less labor intensive and less capital intensive

Short Answer

Expert verified

a) more capital intensive

Step by step solution

1. Understand capital intensity and labor intensity

Capital intensity refers to the amount of capital required to produce goods or services. An economy is considered to be capital-intensive if it relies mainly on capital to produce goods and services. Capital refers to assets that are used in the production process, such as factories, machinery, and technology. Labor intensity refers to the extent to which an economy relies on human labor in the production process. An economy is considered to be labor-intensive if it primarily uses human labor to produce goods and services.

2. Analyze the Chinese economy

The Chinese economy is known for its labor-intensive industries. It has a large population and workforce, which allows businesses in China to rely heavily on human labor for production. A significant portion of goods produced in China are manufactured through labor-intensive methods, such as textiles, footwear, and consumer electronics.

3. Analyze the U.S. economy

The U.S. economy is known for its capital-intensive industries. It has a highly developed infrastructure and advanced technology, which facilitates the large-scale use of capital in the production process. While the U.S. also has a relatively large and skilled labor force, a major portion of goods and services produced in the U.S. relies on technology and machinery, such as the automotive, aviation, and software industries.

4. Compare the Chinese and U.S. economy

Comparing the two economies, it can be inferred that the U.S. economy is more capital-intensive than the Chinese economy due to its higher use of technology and machinery in the production process. On the other hand, the Chinese economy is more labor-intensive than the U.S. economy as it relies more on human labor for production. According to the given options: a) more capital intensive b) more labor intensive c) more labor intensive and more capital intensive d) less labor intensive and less capital intensive

5. Select the correct answer

Based on our analysis, the correct answer is: a) more capital intensive

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