Using the following table with theresources and their cost per unit, whichproduction choice would a businessdecide to use?$100$30 $20Cost per unitCapital Labor LandProduction212choice 1Production152choice 2Production243choice 3Production choice 2Production choice 3Production choice 1LO

Question
Asked Oct 16, 2019
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Using the following table with the
resources and their cost per unit, which
production choice would a business
decide to use?
$100
$30 $20
Cost per unit
Capital Labor Land
Production
2
1
2
choice 1
Production
1
5
2
choice 2
Production
2
4
3
choice 3
Production choice 2
Production choice 3
Production choice 1
LO
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Using the following table with the resources and their cost per unit, which production choice would a business decide to use? $100 $30 $20 Cost per unit Capital Labor Land Production 2 1 2 choice 1 Production 1 5 2 choice 2 Production 2 4 3 choice 3 Production choice 2 Production choice 3 Production choice 1 LO

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Expert Answer

Step 1

The primary objective of any business entity is to maximize profits. Thus, to earn high profit a business must choose inputs used in production in such a way that output is produced at minimum cost.

Step 2

Thus, to find the best production choice, we will find the total cost of each method.

...

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Production Capital cost Labor cost Land cost Total cost choice 1 2x$100-S200 1x$30-S30 2x$20=S40 $270 2X$20 S40 2 1x$100-S100 5x$30-S150 $290 4x$30 S120 2x$100-S200 3x$20-S60 $380

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