Question
The technology of production is essentially 'the way we do things' with a direct impact onthe amount and cost of capital and labor and result
The technology of production is essentially 'the way we do things' with a direct impact onthe amount and cost of capital and labor and result in the technological feasibility of input substitution. The two primary factors are the technology of the production process and the prices of the inputs of production. The technology determines the marginal productivity of the different inputs that can be used in the production process. Combining information on the marginal productivities with the respective prices of the inputs tells the manager how much output is produced per dollar spent on each input. With this information, the manager can then select the combination of inputs that yields a given level of output at least cost. Ford Motor Company introduced the assembly line technology, which utilized an assembly line set-up with specialized labor along the production line, resulted in much less time and cost required to assemble an individual automobile.
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