Answer: Outsource production to other countries where labour is abundant because labour in those countries are cheaper than in their home countries.in order to reduce the cost of Production and maximize profit, on the other hand a firm may use capital intensive production technique in order to improve efficiency in production and cut cost which will also translate to profit maximization.
Explanation:
Production is the creation of goods and services in order to satisfy human wants.production is not complete untill the goods is finally in the hands of consumers. There are four factors of production which are land, Labour, capital and entrepreneurs.
The Labour is the productive power of the individual. It refers to the actual effort both physical and mental made by human being in production. The Labour intensive industry is a kind of industry where extensive use of human Labour in production is more than the use of machine in production. The capital as one of the factors of production, is the wealth which has been set aside for the production of further wealth. This is because capital plays an important role in increasing production. Capital such as tools,machines,equipment, help in increasing production. The capital intensive industry is therefore, the extensive use of machines in production than human effort in the production of goods. The replacement of machines with human Labour enhances efficiency because of the difficult work which can easily be performed with the use of machine.It also aid in the mass production of goods because machines increases output per man. Therefore we can say that production function can be written as x= f ( K,L) where K is capital and L is labour
The product output depends on the techniques of production used in the production of such goods. Given the firm's capital outlay for inputs, the more efficient the technique used the greater will be the firm's output, and the less efficient the technique used the smaller will be its output. The product output also depends on the quantity and quality of resources used in production, a firm can increase or decrease output by increasing or decreasing the quantity of all resources or inputs used. The firm may choose to outsource production to countries where Labour is abundant such as the south east Asia because the Labour is abundant and cheap. They do this in order to reduce their cost of Production and at the end of the day maximize profit. While the firm which use capital intensive production technique use it in order to improve efficiency of their production and also to cut cost of Production which will also increase profit .
