Answer to Question #292818 in Economics for Hafsa

Question

If labor and capital can be substituted for each other in the production of both commodities, when can we say that one commodity is capital intensive and the other labor intensive? 

Answer 1

Capital can be more easily substituted for labor if demand shifts from labor‐intensive to capital‐intensive goods and services when there is a change in factor and commodity prices. This type of easy substitution is also a mechanism for fending off diminishing returns.

So, the statement is true.