The Empire is building another Death Star. The inputs are capital, labor, raw materials, and robots....

The Empire is building another Death Star. The inputs are capital, labor, raw materials, and robots. The construction manager increases the input robots and discovers that output actually falls. What does this imply about cost?

	A.	Cost is strictly increasing.
	B.	Cost is increasing or constant.
	C.	Cost is strictly decreasing.
	D.	Cost is constant.

Solutions

Expert Solution

When the input's increase, the cost increases per unit as the output falls.

Hence the correct option is

A. Cost is strictly increasing.

This is because the price of per unit of input is fixed.

Rahul Sunny answered 1 year ago

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