The substitution of steel for wooden ploughs in agricultural production is an example of

1. A. labour-augmenting technological progress
2. B. capital-augmenting technological progress
3. C. capital-reducing technological progress
4. D. None of the above

Answer: B

Explanation

Labor augmenting is technology that increases skills and productivity of existing labor force (example – teaching people how to use the computer). Capital augmenting technology increases productivity of existing capital goods. In this case, replacement of wooden by steel, increases the productivity of plough to use the computer). Capital augmenting technology increases productivity of existing capital goods. In this case, replacement of wLabor augmenting is technology that increases skills and productivity of existing labor force (example – teaching people how ooden by steel, increases the productivity of plough.