Requiring a large amount of assets to produce a particular good or finance a given amount of sales.
This term is generally used to describe a process or industry. Examples include the automobile, steel, and oil refining industries. They require large amounts of capital for start up, meaning that few companies can afford to enter the industry. For companies within the industry to be successful they must have a high margin of profit or a low cost of borrowing. They also run a high risk because if sales decrease then profits will fall sharply since fixed cost cannot be reduced in the short-term to meet the decreased demand. Capital intensity is measured as the ratio of the total money value of capital equipment to the total amount of labor hired. Rising capital intensity increases the productivity of labor.
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