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The table below contains information on three techniques for producing $15 worth of bar soap. Assume that we specified "$15 worth of bar soap" because soap costs $3 per bar and all three techniques produce 5 bars of soap ($15 = $3 per bar x 5 bars). So you knov %3D

The table below contains information on three techniques for producing $15 worth of bar soap. Assume that we specified "$15 worth of bar soap" because soap costs $3 per bar and all three techniques produce 5 bars of soap ($15 = $3 per bar x 5 bars). So you knov %3D

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The table below contains information on three techniques for producing $15 worth of bar soap. Assume that we specified "$15 worth of bar soap" because soap costs $3 per bar and all three techniques produce 5 bars of soap ($15 = $3 per bar x 5 bars). So you know each technique produces 5 bars of soap. Units of Resource Technique 1 Technique 2 Technique 3 Price per Unit Resource Units Cost Units Cost Units Cost Labor $2 4 $8 2 $4 $2 Land 1 1 1 3 3 4 4 Capital 3 3 1 3 2 Entrepreneurial ability 3 3 3 1 3 Total cost of $15 worth of bar soap $15 $13 $15 a. What technique will you want to use if the price of a bar of soap falls to $2.75? |(Click to select) V Which technique will you use if the price of a bar of soap rises to $4? (Click to select) ) V Which technique will you use if the price of a bar of soap rises to $5? (Click to select) b. How many bars of soap will you want to produce if the price of a bar of soap falls to $2.00? O Five: It is profitable to produce bars of soap at this selling price. O Zero: It is not profitable to produce bars of soap at this selling price. c. Suppose that the price of soap is again $3 per bar but that the prices of all four resources are now $1 per unit. Which is now the least-profitable technique? (Click to select) V d. If the resource prices return to their original levels (those shown in the table) but a new technique is invented that can produce 3 bars of soap (yes, 3 bars, not 5 bars!), using 1 unit of each of the four resources, will firms prefer the new technique? O Yes, they will prefer the new technique. O No, they will still prefer technique 2. O No, they will still prefer technique 1. O No, they will still prefer technique 3.
Transcribed Image Text:The table below contains information on three techniques for producing $15 worth of bar soap. Assume that we specified "$15 worth of bar soap" because soap costs $3 per bar and all three techniques produce 5 bars of soap ($15 = $3 per bar x 5 bars). So you know each technique produces 5 bars of soap. Units of Resource Technique 1 Technique 2 Technique 3 Price per Unit Resource Units Cost Units Cost Units Cost Labor $2 4 $8 2 $4 $2 Land 1 1 1 3 3 4 4 Capital 3 3 1 3 2 Entrepreneurial ability 3 3 3 1 3 Total cost of $15 worth of bar soap $15 $13 $15 a. What technique will you want to use if the price of a bar of soap falls to $2.75? |(Click to select) V Which technique will you use if the price of a bar of soap rises to $4? (Click to select) ) V Which technique will you use if the price of a bar of soap rises to $5? (Click to select) b. How many bars of soap will you want to produce if the price of a bar of soap falls to $2.00? O Five: It is profitable to produce bars of soap at this selling price. O Zero: It is not profitable to produce bars of soap at this selling price. c. Suppose that the price of soap is again $3 per bar but that the prices of all four resources are now $1 per unit. Which is now the least-profitable technique? (Click to select) V d. If the resource prices return to their original levels (those shown in the table) but a new technique is invented that can produce 3 bars of soap (yes, 3 bars, not 5 bars!), using 1 unit of each of the four resources, will firms prefer the new technique? O Yes, they will prefer the new technique. O No, they will still prefer technique 2. O No, they will still prefer technique 1. O No, they will still prefer technique 3.
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