Optimal Input Selection for Olive Oil Production
An olive oil producer has a weekly budget of $4,000 for labor and energy and needs to produce exactly 2,000 liters of olive oil to fulfill a contract. The cost of labor is $250 per worker per week, and the cost of energy is $10 per unit. The table below shows four technically feasible combinations of inputs to produce the required 2,000 liters.
| Combination | Labor (Workers) | Energy (Units) | Output (Liters) |
|---|---|---|---|
| A | 10 | 160 | 2000 |
| B | 12 | 100 | 2000 |
| C | 8 | 210 | 2000 |
| D | 14 | 60 | 2000 |
Based on the information provided, which input combination should the producer choose to meet the production goal while staying within the budget? Explain your reasoning by showing the cost calculation for each combination.
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