Why are banks using more automatic teller machines (ATMs) and employing fewer human tellers? What economic principle is illustrated about resource markets by this example?
What will be an ideal response?
The economic principle is that firms achieve the least-cost combination of inputs when the last dollar spent on each makes the same contribution to total output. This least-cost rule implies that firms will change inputs in response to technological change or changes in input prices. If the marginal product of an ATM machine divided by its price is greater than the marginal product of a human teller divided by its price, then more ATM machines will be employed in the banking sector, especially since ATM machines serve as substitutes for some aspect of human teller work.
Between 1990 and 2000, some 80,000 positions for human tellers were eliminated and many more will lose positions in years to come. The reason for the change is that ATMs are highly productive because a single machine can handle hundreds of transactions daily, and millions of transaction in several years. Human tellers cannot compete with this level of output.
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Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games). An example of capital used by teams to produce their products is
A) the ballparks where the games are played. B) the labor of baseball players. C) the money teams earn from television contracts and ticket sales. D) the land on which baseball games are played.
A university cafeteria changes from offering all-you-can-eat meals for one low price to selling each food item separately. After this change, one would expect that the marginal utility of the last food item consumed in the cafeteria by the typical student would: a. decrease since less food is now likely to be consumed by students who eat a meal in the cafeteria. b. increase since less food is
now likely to be consumed by students who eat a meal in the cafeteria. c. not change since the same quantity of food is now likely to be consumed at each meal. d. decrease since more food is now likely to be consumed by students who eat a meal in the cafeteria.
Refer to the diagram below of the market for corn. There will be a surplus of 8 thousand bushels at the price of:
A. $4/bushel
B. $3/bushel
C. $2/bushel
D. $5/bushel
Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase electric cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________.
A. is indeterminate, definitely falls B. definitely falls, definitely rises C. definitely rises, is indeterminate D. definitely falls, is indeterminate