Question

The capital-to-labor ratio is:Question 40 options:a) a key element in decreasing real wages.b) high in rich countries.c) the ratio of managers to workers.d) high in poor countries.

Answer 1

The correct answer is letter "B": high in rich countries.

Step-by-step explanation:

The capital-to-labor (K/L) ratio studies the relationship between the capital and labor used in the process of producing a good or rendering a service. When capital is higher, the capital-to-labor ratio is high as well. This scenario is common in developed countries with important investment in technology and equipment aiming to increment productivity.

Answer 2

b) high in rich countries.

Step-by-step explanation:

Capital-to- labour ratio measure the degree of capitalisation of an economy.

Labour is the service that is given by workers in exchange for salaries in the production process.

Capital is the long term input that is put into the manufacturing process, usually in the form of machinery or systems that automate production.

Capital-to-labour ratio= Total capital/ Total labour

Rich countries have a high level of capitalisation of their production process, where a lot of activity is automated. So capital is high and labour input is low. This results in a high capital-to-labour ratio.

On the other hand poor countries are more labour inensive, so their capital-to-labour ratio is low.