Firm's Decision on Input Quantity

Choosing Production Technologies

Modeling Technologies with Fixed Proportions and Constant Returns to Scale

Increasing Returns to Scale

Decreasing Returns to Scale

Constant Returns to Scale

Choosing a Cost-Effective Production Method

A manufacturing firm needs to produce 100 units of a product. It can use one of two available production technologies. Technology X uses 10 hours of labor and 5 machines. Technology Y uses 4 hours of labor and 8 machines. The hourly wage for labor is $20, and the rental cost per machine is$50. To minimize its production costs, which technology should the firm choose?

A textile firm is evaluating four different production technologies to produce 100 meters of cloth. The table below shows the number of workers and the tonnes of coal required for each technology to achieve this output.

Assuming the firm aims to minimize costs, which technology can be ruled out as inefficient regardless of the price of labor or coal?

A company can produce 100 widgets using any of the three production technologies listed below. Each technology uses a different combination of labor (workers) and capital (machines). Match each economic scenario describing the relative cost of inputs to the production technology that a cost-minimizing firm would most likely choose.

Impact of Input Price Changes on Technology Choice

Analyzing Production Technology Characteristics

For a given production technology that uses both labor and machinery, a firm can produce the same quantity of output by decreasing the number of workers and increasing the number of machines.

A firm is deciding between two production methods to manufacture its product.

• Method 1: A highly automated system that requires significant electrical power but very few workers.
• Method 2: A manual assembly line that uses minimal electricity but requires a large number of workers.

The firm operates in a region where electricity prices are highly volatile and can increase unexpectedly by large amounts, while wages for workers are stable under long-term contracts. Which of the following statements presents the most compelling reason for the firm's choice of technology?

A company wants to select the most cost-effective production technology from several available options to produce a specific quantity of goods. Arrange the following actions into the logical sequence that a rational, cost-minimizing firm would take to make this decision.

During the 18th century, wages for workers in Britain were relatively high, while the cost of energy from coal was comparatively low. In contrast, in other regions like France, wages were lower relative to the cost of coal. Based on the principle of cost minimization, what would be the most likely outcome regarding the adoption of new production technologies?