Company X is considering different production methods. Assume each worker is paid $50 per hour and each machine costs $90 each. Which of the following will give them the best balance of workers and technology, based on cost?
a. 5 workers and 5 machines
b. 7 workers and 4 machines
c. 10 workers and 2 machines
d. 15 workers and 1 machine
c. 10 workers and 2 machines
10 workers ($500) plus 2 machines ($180) is the lowest total cost ($680) option. Because different production methods can produce the same outcome, a profit-seeking firm will choose the production technology that is least expensive, given the prices of labor and machines.
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