A firm needs to choose a production technology to manufacture its goods. The market wage for a worker is £10, and the price of a ton of coal is £20. Given the following technologies, which one would a cost-minimizing firm choose?

Production Technology Cost Analysis

A firm is deciding between two production methods. Method 1 uses 1 worker and 6 tons of coal. Method 2 uses 4 workers and 2 tons of coal. Given a wage of £10 per worker and a price of £20 per ton of coal, it is more economical for the firm to choose Method 1.

Isocost Line Interpretation

An isocost line illustrates all combinations of two inputs (in this case, labor and coal) that a firm can purchase for a given total cost. For a specific isocost line representing a total expenditure of £80, match each point or value with its correct economic description, given a wage of £10 per worker and a coal price of £20 per ton.

Economic Rationale for Technology Choice

A manufacturing process requires 4 workers and 2 tons of coal. If the wage for a worker is £10 and the price per ton of coal is £20, the total cost of production using this method is £____.

A firm wants to determine the most cost-effective production technology using two inputs: labor and coal. Arrange the following steps in the correct logical sequence to identify the lowest-cost option.

Deriving Input Prices from Cost and Quantity Data

Re-evaluating Production Costs

Impact of Proportional Input Price Changes

Baseline for Calculating Gains from Technology Adoption

Profit Increase from Technology Switching Equals Cost Reduction