Question

2. There are four methods to prepare a tax return: with a personal computer it involves one hour of work; with pocket calculator takes 12 hours; with pocket calculator and also paper and pencil require 12 hours too; documents with paper and pencil takes 16 hours. The personal computer and installed software cost $ 1,000, the pocket calculator costs $ 10, and the paper and pencil cost $ 1. to.

a. Which of the methods is technologically efficient?

b. Which method is economically efficient if the wage rate is

(i) $ 5 an hour?

(ii) $ 50 an hour?

(iii) $ 500 an hour?

Answer 1

Answer:-

(A) Technically The work with personal computer is efficient because it's save working time of firm. that means it's take only just 1 hour of Work as compared to other methods. so we should file return technologically with Personal computer.

=> (B) economically efficient method means work with minimum cost. so we find total cost for each e.i wage + purchase cost .

=> (1) If wage rate $5 an hour then :-

Total cost of personal computer =( $5*1) = $5 + $1000 = 1005

Total cost for calculator = ($5*12) = $60+$10 = $70

Total cost of pencil and documents = (5*16) = $80 +$1 = $81

So if wage rate $5 an hour then economically the work with pockets calculator is efficient as It cost is minimum

=> (2) If wage rate $50 an hour then:-

personal computer = ($50*1 )= $50 + $1000 = $1050

pocket calculator =( $50*12) = $600 + $10 = $610

pencil and paper = ($50*16) = $800 + $1 = 801

if wage rate $50 then economically work pocket calculator is efficient as it's cost minimum.

=> (3) If wage rate $500 an hour then:-

Personal computer = ($500*1) = $500 + $1000 = $1500

pocket calculator = ($500*12) = $6000 + $10 = $6010

pencil and documents = ($500*16) = $8000 + $1 = $8001

If wage rate $500 per hour then work with Personal computer is efficient as it's total cost is minimum.