Previous Year Question
The substitution of steel for wooden ploughs in agricultural production is an example of
labour-augmenting technological progress
capital-augmenting technological progress
capital-reducing technological progress
none of the above
Correct Answer: B
Detailed Solution
Technological progress can increase the effective productive capacity of labour or capital. When improved technology enables the same physical quantity of capital to produce more output, it is described as capital-augmenting technological progress.
It may be represented through the production function:
Where:
Y= total output
K= physical capital
L= labour
Ak = technology augmenting the effectiveness of capital
When Ak increases, the effective capital services rise even if the physical quantity of capital remains unchanged.
Replacing a wooden plough with a steel plough can:
Make the plough more durable.
Permit more effective tillage of hard soil.
Reduce breakdowns and frequent replacement.
Enable more or better ploughing within the same time.
Increase the productivity of the capital instrument used with the available labour or animal power.
A plough is a capital good. Substitution of a more efficient steel plough for a wooden plough improves the quality and productive services of that capital good. It is therefore an example of capital-augmenting technological progress.
Examination of the options:
Option (a): Labour-augmenting technological progress—Incorrect
Labour-augmenting progress makes each worker more effective and may be represented as:
In the present case, the principal technological change is embodied in the capital instrument—the plough—rather than in the worker’s knowledge or skills.
Option (b): Capital-augmenting technological progress—Correct
A steel plough makes the capital instrument more durable and productive than a wooden plough.
Option (c): Capital-reducing technological progress—Incorrect
The technology does not reduce the usefulness or effectiveness of capital; it increases it.
Option (d): None of the above—Incorrect
The example is appropriately classified as capital-augmenting technological progress.
Qualification: A better plough can indirectly increase labour productivity as well. Nevertheless, the question focuses on technological improvement embodied in a capital good, making capital-augmenting progress the appropriate classification.