Suppose that the only costs involved in car production are the cost of robots, the cost...
Suppose that the only costs involved in car production are the cost of robots, the cost of hiring workers and the
cost of raw materials.
Raw materials (steel, glass, rubber, textiles) cost $2,000 per
car.
Robots have an annualized cost of $1,000,000 per year (interest,
maintenance, and depreciation) and each worker is paid an annual
salary of $40,000 per year.
If 1 robot is purchased then each worker can produce 100 cars per
year.
If 2 robots are purchased then each worker can produce 500 cars per
year.
Output per worker depends only on the number of robots purchased
and does not depend on how many workers are hired.
Firms can choose how many workers to hire.
In order to minimize costs in the long-run, the firm will choose 1
robot when the number of cars produced is___ per year and will
choose 2 robots when the number of cars produced is___ per
year.
Question 12 options:
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Please explain with detail. Thanks in advance.
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Suppose that the only costs involved in car production are the
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