The substitution of steel for wooden ploughs in agricultural production is an example of

The correct option is capital-augmenting technological progress.

To understand why, let us break down the concepts of technological progress in economics:
1. Technological Progress: This refers to an improvement in the efficiency of factors of production (inputs) such as labor and capital, allowing for more output to be produced with the same amount of inputs, or the same output with fewer inputs.
2. Capital-Augmenting Technological Progress: This occurs when technology makes capital inputs (like machinery, tools, and equipment) more productive. In this case, steel ploughs are a form of capital. Substituting steel ploughs for wooden ploughs increases the efficiency, durability, and productivity of the capital equipment used in agricultural cultivation. Since the quality and productivity of the physical capital (the plough) is enhanced, it directly augments the efficiency of capital.
3. Labour-Augmenting Technological Progress: This makes labor more productive (e.g., through education, training, or tools that directly multiply human capabilities). While a better plough ultimately helps the farmer, the primary change is the enhancement of the physical tool itself (capital).
4. Capital-Reducing Technological Progress: This would imply that less capital is used in a way that doesn't increase its productivity, or reduces the value/efficiency of capital, which is not the case here.

Therefore, replacing wooden ploughs with more efficient steel ploughs is a classic example of capital-augmenting technological progress, as it improves the productivity and efficiency of the capital asset used in production.