Evaluating a Manager's Production Choice
A textile factory manager has been using 'Method B' for years, which requires 4 workers and 2 tons of coal to produce 100 meters of cloth. This was the cheapest method when wages were £10 and coal cost £20 per ton. Recently, the market has changed: wages remain at £10, but the price of coal has dropped to £5 per ton. An alternative, 'Method A', which uses 1 worker and 6 tons of coal, is also available. The manager insists on sticking with 'Method B' out of habit. Evaluate the manager's decision. In your answer, calculate the cost of production for both methods under the new prices and explain the financial implications of the manager's choice for the company.
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