This basic economic problem is with regards to the mix of resources to use to create each good and service. These types of decisions are generally made by companies which attempt to create their products at lowest cost. By way of example, banking institutions have substituted the majority of their counter service individuals with automatic teller machines, phone banking and Net banking. These electronic ways of moving money, utilizing capital as opposed to labor resources, have decreased the banks’ production costs. In the Nineteen fifties dams were being constructed in China by countless people making use of containers and shovels. On the other hand dams were being constructed in the United States by using huge earth moving devices. The initial approach to production, using a resource combination which includes a small capital and much labor, is labor-intensive while the second, utilizing a little labor and a lot of capital, is capital-intensive. Each one of these ‘how’ decisions were made based on lowest cost and accessible modern technology.
