An industry has lowered its labor costs through which of the following methods?

• A. Reducing the use of capital equipment
• B. Increasing automation and adopting new technology
• C. Raising wages for all employees
• D. Expanding the workforce without changing production methods

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of labor costs, which include wages, benefits, and other expenses related to employing workers.
2. Step 2: Recognize that reducing labor costs means lowering the expenses associated with labor without necessarily reducing output.
3. Step 3: Analyze each option to see how it affects labor costs: reducing capital equipment does not directly lower labor costs; raising wages increases labor costs; expanding the workforce without changing production methods likely increases total labor costs.
4. Step 4: Identify that increasing automation and adopting new technology can reduce the need for labor or make labor more efficient, thereby lowering labor costs.
5. Step 5: Conclude that the method which lowers labor costs is increasing automation and adopting new technology, as it improves productivity and reduces reliance on labor.