Step 1: Meaning of modernisation.
Modernisation refers to adopting new techniques, advanced technology, and updated methods of production.
Step 2: Effect on capacity.
With modern machinery and automation, the production capacity of a business increases significantly.
For example, introducing computerised machines enables faster and bulk production.
Step 3: Option analysis.
- (A) Products: Modernisation may improve quality, but not its main effect.
- (B) Production: Related, but only a part of the outcome.
- (C) Processes: Improved, but indirectly.
- (D) Capacity: Correct, as modernisation directly enhances capacity.
Step 4: Conclusion.
Modernisation primarily improves production capacity.