Question: Firm A plans to produce 500 units per day of good X. The firm can choose either of the following two input combination t produce 500 units per day.
Process 1 Process 2
Labor 8 12
Capital 14 7
To obtain the services of labor and capital for a day, firm A must pay wages of $100 per unit of labor and $80 per unit of capital. For firm A, process ________ (1, 2) is economically efficient because the efficient process costs $___________ compared with $__________ for the inefficient process. Show your work here: