A firm uses two inputs in the production of a single good. The input requirements per unit of output for a number of alternative techniques are given by the following table:
|
Process
|
1
|
2
|
3
|
4
|
5
|
6
|
|
Input 1
|
9
|
15
|
7
|
1
|
3
|
4
|
|
Input 2
|
4
|
2
|
6
|
10
|
9
|
7
|
The firm has exactly 140 units of input 1 and 410 units of input 2 at its disposal.
1. Discuss the concepts of technological and economic efficiency with refer- ence to this example.
2. Describe the optimal production strategy for the firm.
3. Would the firm prefer 10 extra units of input 1 or 20 extra units of input 2?