The information on three different technologies named as q, v and x is listed in the table below. Note that all of these technologies use different combinations of two types of factors of production, labor and capital, to produce 1000 units of output. Consider the first scenario where the per unit prices of the inputs, labor and capital are $50 and $25 respectively. Technology No of Labors Capital (tons) Cost value ($) A 10 50 B 30 20 C 50 10 Now imagine that a discovery has been made which has led to labor advancements leading to a reduction in per unit price of labor to $10, ceteris paribus. Which technology will a typical firm adopt under these changed circumstances and why? Using the value of costs found, what is the value of the economic rent for this firm?
The information on three different technologies named as q, v and x is listed in the table below. Note that all of these technologies use different combinations of two types of factors of production, labor and capital, to produce 1000 units of output. Consider the first scenario where the per unit prices of the inputs, labor and capital are $50 and $25 respectively.
|
Technology |
No of Labors |
Capital (tons) |
Cost value ($) |
|
A |
10 |
50 |
|
|
B |
30 |
20 |
|
|
C |
50 |
10 |
Now imagine that a discovery has been made which has led to labor advancements leading to a reduction in per unit
Using the value of costs found, what is the value of the economic rent for this firm?
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