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Strategic Technology Adoption Based on Input Costs
A multinational corporation plans to open two new factories to produce a standardized product. One factory will be in a country where labor is expensive but capital is cheap. The other will be in a country where labor is cheap but capital is expensive. The company can use one of two production methods: Method A, which is highly labor-intensive, or Method B, which is highly capital-intensive. As an economic consultant, which method would you recommend for each country? Justify your recommendations by explaining the relationship between the relative prices of inputs and the choice of production technology.
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A company is evaluating three different production methods to manufacture one standardized product. The inputs required for each method are shown below:
- Method A: 5 hours of labor, 10 units of capital
- Method B: 8 hours of labor, 8 units of capital
- Method C: 12 hours of labor, 6 units of capital
Based on an analysis of the relative proportions of inputs for each method, which of the following statements is correct?
Analysis of Production Methods
A manufacturing firm is considering three different technologies to produce one standardized widget. Each technology uses a different combination of labor and capital. Match each technology with the description that best characterizes its relative use of inputs.
Production Method Choice Under Changing Input Costs
Two technologies exist for producing one ton of a specific crop. Technology A requires 2 acres of land and 100 pounds of fertilizer. Technology B requires 1 acre of land and 300 pounds of fertilizer. Based on this information, Technology B is more land-intensive than Technology A.
A firm can produce 1,000 units of a product using one of three different production technologies. The input requirements for each technology are listed below:
- Technology P: 20 labor-hours and 10 machine-hours
- Technology Q: 15 labor-hours and 15 machine-hours
- Technology R: 10 labor-hours and 25 machine-hours
Which of the following statements accurately analyzes the input intensity of these technologies?
Strategic Technology Adoption Based on Input Costs
Comparing Production Technology Intensity
A textile factory automates its weaving process by replacing 50 manual looms operated by 50 workers with 10 advanced automated looms operated by 5 workers. The total output of fabric remains the same. This change in production technology has made the process:
A company is analyzing three different technologies to produce 100 units of a standardized product. The input requirements are listed below. Arrange the technologies in order from most labor-intensive to least labor-intensive.
- Technology X: 50 labor-hours and 100 machine-hours
- Technology Y: 80 labor-hours and 80 machine-hours
- Technology Z: 120 labor-hours and 60 machine-hours