Question:
TECHNICAL AND PRICE EFFICIENCY
Listed below are several possible input combinations for producing 5,000 units of a pocket PC. Two of the input combinations are technically efficient.
|
|
Materials
|
Labor
|
Labor
|
|
Unit input prices
|
$150
|
$125
|
$50
|
|
Input combinations:
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|
|
|
|
A
|
250
|
480
|
1,800
|
|
B
|
275
|
450
|
1,350
|
|
C
|
230
|
475
|
1,425
|
|
D
|
375
|
500
|
1,500
|
Required:
1. Identify the technically efficient input combinations. Explain your choices.
2. Which of the two technically efficient input combinations should be used? Explain.