Prelims 2015 · Economy · Question 90
The substitution of steel for wooden ploughs in agricultural production is an example of
Answer
capital-augmenting technological progress
- (a) Labour-augmenting technological progress: This raises the productivity of labour directly. Replacing a wooden plough with a steel plough mainly improves the effectiveness of the tool/capital equipment, not labour itself. Verdict: Incorrect.
- (b) Capital-augmenting technological progress: This makes existing capital goods more productive or efficient. A steel plough is a superior capital instrument compared to a wooden plough, so this is capital-augmenting progress. Verdict: Correct.
- (c) Capital-reducing technological progress: This means less capital is needed per unit of output. Here, the change is to a better capital good, not a reduction in capital requirement. Verdict: Incorrect.
- (d) None of the above: Since (b) fits correctly, this option is wrong. Verdict: Incorrect.