Correct Option
Capital-augmenting technological progress refers to advancements that increase the productivity or efficiency of capital goods. When wooden ploughs are replaced by steel ploughs, the capital (the plough) becomes more durable, efficient in tilling soil, and requires less maintenance. This technological change enhances the output generated per unit of capital or allows for the same output with less capital input over time, thereby augmenting the capital's productive capacity.
Incorrect Options
Labour-augmenting technological progress involves improvements that increase the productivity of labour, allowing workers to produce more output per unit of time or effort. The transition from wooden to steel ploughs primarily impacts the efficiency of the tool (capital) rather than directly enhancing the labour input.
Capital-reducing technological progress would imply a decrease in the requirement for capital to achieve a certain level of output, or a reduction in the productivity of existing capital. The introduction of steel ploughs, by contrast, enhances the effectiveness and durability of the capital good, increasing its contribution to production.
Option (B) accurately describes the phenomenon, making this option incorrect.