Labor Scarcity Drives Capital Use Steps:

• Capital-intensive methods rely on machines over workers to boost output.
• In low-income economies, production choices depend on factor availability and costs.
• Abundant cheap labor favors labor-intensive methods; scarcity pushes toward capital.
• Evaluate options: identify which raises labor costs, incentivizing machinery.

Why C is correct:

• Shortage of low-cost labor increases wages, making capital (machines) relatively cheaper per Heckscher-Ohlin trade theory, encouraging capital-intensive production.

Why the others are wrong:

• A: Foreign aid grants may fund projects but don't specifically raise labor costs or scarcity.
• B: Supplies of low-cost labor reduce wages, promoting labor-intensive methods instead.
• D: Shortage of supervisors affects management but not core labor availability for production.

Final answer: C