Question

During the last 30 years computers have changed most production processes. Use isocost-isoquant diagram analysis to show the effect the spread of computers have had on labour use during the last 30 years. Make sure you list your assumptions clearly.

Can you make sure you explain the diagarms aswell, thank you

Answer 1

• Use of computer is production process has become relatively cheaper due to its productivity while labor requires relatively heavy cost. Thus, firms now are switching to use of computer in large scale.

Following are assumptions:

• Only factor of production are used e.g Labor and Computer.
• Both can be substituted for each other.
• Firm can use both labor and computer in production processes.

Following is diagram of isocost line: