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Consider the following fixed proportions  technologies: Technology A uses 3 units of labour and 6 units of...

Consider the following fixed proportions  technologies:

Technology A uses 3 units of labour and 6 units of capital to produce 10 units of output. Technology B uses 8 units of labour and 4 units of capital to produce 10 units of output.

The firm has 12 units of labour and 10 units of capital. It can use either of the technologies, or combine the two in its production. The maximum amount of output the firm can produce is

a greater than 20 units

b between 15 and 20 units

c between 10 and 15 units

d less than 10 units

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Answer #1

The answer is option (A).

     The firm has a labour of 12 units and capital of 10 units

In technology A it uses 3 units of Labour and 6 units of capital.

In technology B it uses 8 units of labour and 4 units of capital.

If it uses technology A it can produce only 10 units , same is the case with B, but if we combine the two technology we will use 11 units of labour and 10 units of capital and produce 20 units of product , so a labour remains unused, so generally it can use 20 units or more than 20 units utmost.

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