A company can produce 100 computer chips using two different methods. Method A requires 2 workers and 10 machines. Method B requires 8 workers and 4 machines. Analyze the economic conditions under which a profit-maximizing firm would choose Method B over Method A.

Technology Choice in Textile Manufacturing

If a new production technology is introduced that uses fewer of all inputs (for example, both fewer workers and fewer machines) to produce the same amount of output, a cost-minimizing firm will always switch to this new technology, irrespective of the wages paid to workers or the rental cost of machines.

The Paradox of Obsolete Technology

A firm can produce 100 widgets using one of two available technologies. Technology B requires 10 workers and 2 machines. A newer, more efficient Technology A-prime requires only 4 workers and 5 machines. Match each relative input price scenario to the cost-minimizing technology choice a firm would make.

The Persistence of 'Outdated' Production Methods

Justifying an 'Obsolete' Technology Choice

A firm can produce a specific quantity of output using two available production technologies. Technology B requires 10 workers and 2 machines. A newer Technology A-prime requires 4 workers and 5 machines. If 'w' represents the wage rate for a worker and 'r' represents the rental cost of a machine, under which of the following conditions would a cost-minimizing firm choose to use the older Technology B?

Agricultural Production Decision

A firm is currently using Technology B, which requires 10 workers and 3 machines to produce a specific quantity of goods. A new, superior Technology A-prime becomes available that can produce the same quantity with only 5 workers and 2 machines. True or False: Given that Technology A-prime uses fewer of both inputs, it is impossible for Technology B to remain the cost-minimizing option, regardless of the relative costs of labor and machines.