Helium Sports produces shoes at a factory that is designed to work at the effici

Question

Helium Sports produces shoes at a factory that is designed to work at the efficient scale of production using a combination of 2 machines and 400 workers. The cost of labor has recently increased by 25%. In the given situation, which of the following steps should the company take?

a. reduce production quantity to keep costs under control

b. make changes to lower the opportunity costs

c. update the factory with machines that require fewer workers

Helium Sportmod ces s ces at a acto v u ar 1s designed o w ork at t e ef ciett sca e of mod cuo usu g a co n na an of 2 t ac nes and 4 0 wo ers. The cost of at a bas receti y micrease by 25% n te gas en s tuato w nch of de o lowmg steps should the cour any take TTelnim Sports should redace production quantry to keep costs 1nder control b. Helium Sparts should make changes to lawe the oppoatunity casts .Heliun Sporta sbould update the factoy with machiacs that require fewwer workers. o d. Helram Sports should lower pnces on their shoestoincrease demand

Explanation / Answer

Answer.) c. update the factory with machines that require fewer workers

Since firm already working at efficient scale of production using a combination of 2 machines and 400 workers.with Increase in cost of labor by 25% , it will definitely disturb the efficient scale. Therefore, Firm should update the factory with machines that require fewer workers.

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