The table below shows three different technologies used to produce various levels of output. Output Tech 1 Tech 2 Tech 3 K 6 7 K K 11 2 3 7 10 14 1 4 4 3 6 8 10 12 13 5 8 4 14 12 7 10 5 20 15 15 12 12 26 16 21 11 14 14 7 32 (a) In general, which input technology is the most desirable? (b) If the price of capital is $4 per unit and the price of labor is $2 per unit which technology will be chosen to produce 11l units of output? (c) Will this still be cheapest if the input prices change to $3 and $3, respectively? (d) Or $2 and $4, respectively? (c) For cach of the three sets of prices in (b), (c), and (d) above, establish which technology is chcapest at cach output level.

The table below shows three different technologies used to produce various levels of output. Output Tech 1 Tech 2 Tech 3 K 6 7 K K 11 2 3 7 10 14 1 4 4 3 6 8 10 12 13 5 8 4 14 12 7 10 5 20 15 15 12 12 26 16 21 11 14 14 7 32 (a) In general, which input technology is the most desirable? (b) If the price of capital is $4 per unit and the price of labor is $2 per unit which technology will be chosen to produce 11l units of output? (c) Will this still be cheapest if the input prices change to $3 and $3, respectively? (d) Or $2 and $4, respectively? (c) For cach of the three sets of prices in (b), (c), and (d) above, establish which technology is chcapest at cach output level.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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