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the factors of production are labour (L) and capital (K). ing questions regarding the production of 300 cars per Production type Units of Capital Units
the factors of production are labour (L) and capital (K). ing questions regarding the production of 300 cars per Production type Units of Capital Units of Labour A 7 2 5 6 D 4 E 5 N F 6 G a) Plot the production methods using the combinations of labour with labour on the x-axis and capital on the y-axis. (8 marks) b) Which production method or methods are dominated? Explain your answer (2 marks) c) Which production methods are capital-intensive bour-intensive? Provide an explanation for your answer. (4 marks) d) Assume a unit of labour costs the firm R 15 000 per month, and the cost for each unit of capital is R25 000 per month. (i) Which method is the most cost-effective for manufacturing 300 cars? Show your calculations. (4 marks) (ii) Graphically illustrate the isocost line for the cost-effective production method with labour on the x-axis and capital on the y-axis. (7 marks) (iii) Now, suppose that the government offers a R3 000 wage subsidy per unit of labour per month to car manufacturers. Explain the effect of the wage subsidy on the choice of production methods by car manufacturers and graphically illustrate the new isocost line . (1 5 marks)
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