TECHNICAL AND PRICE EFFICIENCY
Listed below are several possible input combinations for producing 5,000 units of a pocket PC. Two of the input combinations are technically efficient.
|
|
Materials |
Labor |
Labor |
|
Unit input prices |
$150 |
$125 |
$50 |
|
Input combinations: |
|
|
|
|
A |
250 |
480 |
1,800 |
|
B |
275 |
450 |
1,350 |
|
C |
230 |
475 |
1,425 |
|
D |
375 |
500 |
1,500 |
Required:
1. Identify the technically efficient input combinations. Explain your choices.
2. Which of the two technically efficient input combinations should be used? Explain.