I dont understand the following exercise: 20. Refer to the data in the table below, which shows
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Question:
I dont understand the following exercise:
20. Refer to the data in the table below, which shows various methods of producing a given volume of output, to answer the questions below.
Method Capital Labour Output
A 5 12 100
B 8 15 100
C 7 10 100
The prices of capital and labour are $5 and $10 respectively. If the prices of capital and labour were reversed:
a.method B would be technically efficient
b.method C would be technically inefficient
c.method B would be economically efficient
d.method A would be economically efficient
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