标题: economic vs technological efficiency [打印本页] 作者: hanvinh 时间: 2011-7-13 16:48 标题: economic vs technological efficiency
Help!
It says in some review notes that a process is not technologically efficient, it cannot be economically efficient. But what if one of the inputs is extremely costly?
Consider this example ( i know the numbers are extreme, but bear with me): You can make a product with either 1000 labor hours, or 1 labor hour and 1 machine hour. The machine is some super-duper expensive monstrosity, and costs $100 million to to run for 1 hour. Labor costs $10 per hour.
Sooooo, using 1000 labor hours would be economically efficient (because it costs less) but NOT technologically efficient, because it uses more inputs......right?
So did i just prove that a process can be economically efficient, but not technologically efficient? I know i'm misunderstanding the concept, but I can't help but think of it this way.
HELP!!!作者: waldziuchna 时间: 2011-7-13 16:48
Tech efficency is using the least amount of inputs.
Economic efficency is whatever method with the lowest cost.
Machine Labor // TOTAL INPUTS // TOTAL COST
A 10 5 // 15 // $150
B 12 4 // 16 // $160
C 13 1 // 14 // $140
C is most technoligcly efficent, because it uses the least inputs, HOWEVER "A" is also technologiclly efficient because it uses less inputs than B. That being said, C is the MOST technologiclly efficient method of production
Throw out a cost of machine ($100) and Labor ($10) you see that "C" is also the most economiclly efficient method because it costs only $140, which is the lowest cost between all 3 alternatives
Edited 2 time(s). Last edit at Tuesday, December 1, 2009 at 01:37PM by mbolzicco.作者: Benjiko 时间: 2011-7-13 16:48
Can someone verify mbolzicco's post?作者: Flok 时间: 2011-7-13 16:48
A would only be technologically efficient if C didn't exist. I don't think there's such thing as "more technologically efficient". I think it's either technologically efficient or it's not. The litmus test is what other options are presented.
