A firm produces 100 meters of cloth. Initially, it uses a technology requiring 4 workers and 2 tons of coal. The wage for a worker is £10 and the price of a ton of coal is £20. Then, the wage increases to £40 per worker, while the price of coal remains unchanged. A new technology becomes available that requires only 1 worker and 6 tons of coal to produce the same 100 meters of cloth. What is the economic gain for a firm that is the first to switch to the new technology after the wage increase?
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Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
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A firm produces 100 meters of cloth. Initially, it uses a technology requiring 4 workers and 2 tons of coal. The wage for a worker is £10 and the price of a ton of coal is £20. Then, the wage increases to £40 per worker, while the price of coal remains unchanged. A new technology becomes available that requires only 1 worker and 6 tons of coal to produce the same 100 meters of cloth. What is the economic gain for a firm that is the first to switch to the new technology after the wage increase?
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