Reference no: EM133248778

Explain the logic of being capable of producing a certain level of output through your use of multiple alternative combinations of factor inputs. Incorporate into your response how the theory of the law of diminishing returns impacts the quantities of the factor inputs included in each of the stated alternatives (e.g. if one combination is 6 workers and 1 machine and a second combination is 3 workers and 2 machines and either combination will produce the same level of output, why did the addition of only 1 machine allow for the elimination of 3 workers).

Explain how when there are multiple combinations of factor inputs capable of producing any level of output the particular combination of factor inputs the Firm elects to use is determined (i.e. explain the least cost rule).

Explain how once multiple levels of output and their respective least cost method of generating that level of out is determined the Firm then identifies the specific quantity of output they will elect to produce to maximize their profit (i.e. explain the profit maximization rule).

Lastly, if the current pandemic heightens a protectionist mentality and the cost benefit of low cost foreign labor was overwhelmed by a drive to make everything domestically, what would you project this would do to the cost of the goods then available for sale in the market.