Labor-Intensive Benefits in Personal Services

Steps:

• Recognize the firm offers personal services, emphasizing human interaction.
• Compare labor-intensive (more workers) vs. capital-intensive (more machines) production.
• Identify advantages: labor-intensive enhances personalization in services.
• Evaluate options to find the supportive aspect for preferring labor-intensive.

Why A is correct:

• In personal services, labor-intensive production enables direct human engagement, boosting customer satisfaction through tailored experiences, as defined in service economics where human touch drives perceived value.

Why the others are wrong:

• B: Higher production costs deter the choice, as firms seek cost efficiency.
• C: Less flexibility discourages the preference, since labor allows adaptability to customer needs.
• D: Worse service quality opposes the choice, as labor-intensive improves personalization.

Final answer: A