Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 2 - The Market System and the Circular Flow - Questions - Page 44: 7c

Answer

If the cost of labor per resource unit were to drop from \$3 to \$1.5, the most cost-efficient choice for technique would be Technique 1, whose total cost would be \$27.5, a lower price than all of the other techniques.

Work Step by Step

By using table provided, it is possible to calculate the new costs of Techniques 1, 2, and 3 to \$27.5, \$31, and \$30.5 respectively. Changing the cost per resource unit of labor alters the overall cost of Technique 1 the most, since it requires 5 units of labor (the most of any technique) to manufacture the product.
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