Production technology 3 3 workers

7 machines

TABLE 7.13 Three Ways to Clean a Park

Production technology 1 uses the most labor and least machinery, while production technology 3 uses the least

labor and the most machinery. Table 7.14 outlines three examples of how the total cost will change with each

production technology as the cost of labor changes. As the cost of labor rises from example A to B to C, the firm

will choose to substitute away from labor and use more machinery.

Access for free at openstax.org
7.5 • Costs in the Long Run 175

Example A: Workers cost $40, machines cost $80

Labor Cost

Machine Cost

Total Cost

Cost of technology 1 10 × $40 = $400 2 × $80 = $160 $560

Cost of technology 2

7 × $40 = $280 4 × $80 = $320 $600

Cost of technology 3

3 × $40 = $120 7 × $80 = $560 $680

Example B: Workers cost $55, machines cost $80

Labor Cost

Machine Cost

Total Cost

Cost of technology 1 10 × $55 = $550 2 × $80 = $160 $710

Cost of technology 2
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