-FasterChip, Inc. is considering five alternative techniques for assembling personal computers. The table shows the amounts of labor and capital required by each of these techniques to make 10 computers a day. Labor costs $15 an hour and capital costs $100 a unit.
a) Which techniques are technologically efficient and which are not? Explain your answer.
b) Which technique is economically efficient? Explain.
c) If FasterChip uses its plant in Mexico, it can lower the labor cost to $10 an hour. Which technique will the company use in Mexico? Explain.
Definitions:
Firm's Assets
The economic resources owned by a business, including cash, property, equipment, and intellectual property, which are used to generate revenue.
Stock Split
A business procedure in which a corporation splits its current shares into more shares to increase the shares' marketability.
Round Lot
A standardized number of units of an asset or security, usually used as the normal trading unit in the stock market.
Clientele
Refers to the base of customers or clients who regularly do business with an establishment or who are served by an organization, professional, or agency.
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