Hello,

Please, help me with this question. Thank you.

1.Suppose your business uses workers and machines in some combination to make your final product. Today, your supplier announced a reduction in the price of the machines. Explain what might happen to the number of machines you use and the number of workers and why. Also, suppose that your firm faces increasing returns to scale. How might that interact with the results of a lower price for machines? (Hint: Have you addressed both of the effects of a price change on an input? Returns to scale is about the implications of changing both inputs at the same time, like increasing both labor and capital together. Could we see that in this example?)