The production method that relies heavily on machinery and capital, resulting in a high proportion of production costs due to capital equipment.

The production method that relies heavily on machinery and capital, resulting in a high proportion of production costs due to capital equipment.

• A. Capital Intensive
• B. Flow Production
• C. Line Production
• D. Mass Production

Answer: (A)

The main idea is capital intensity: a production method that relies heavily on machinery and capital has high fixed costs tied to equipment, plants, and energy, so capital expenditure dominates the overall cost structure. In such systems, the cost of machines, depreciation, maintenance, and financing sits upfront and per unit costs are driven by how intensively those assets are used, rather than by paying a large workforce. This is common in highly automated or engineered processes, where spreading the fixed capital cost over high output is the aim. While flow production, line production, and mass production describe ways of organizing work and producing large quantities, they don’t define how costs are distributed between capital and labor. These methods can be implemented with varying degrees of capital investment, but the defining feature in the statement is the heavy reliance on machinery and capital, i.e., capital-intensive production.

The main idea is capital intensity: a production method that relies heavily on machinery and capital has high fixed costs tied to equipment, plants, and energy, so capital expenditure dominates the overall cost structure. In such systems, the cost of machines, depreciation, maintenance, and financing sits upfront and per unit costs are driven by how intensively those assets are used, rather than by paying a large workforce. This is common in highly automated or engineered processes, where spreading the fixed capital cost over high output is the aim.

While flow production, line production, and mass production describe ways of organizing work and producing large quantities, they don’t define how costs are distributed between capital and labor. These methods can be implemented with varying degrees of capital investment, but the defining feature in the statement is the heavy reliance on machinery and capital, i.e., capital-intensive production.