Condition for Preferring Technology B over a Superior Technology (A-prime)

Technology Choice in a Low-Wage Economy

The continued use of older, more labor-intensive production methods in a country, despite the availability of more modern, capital-intensive alternatives, is definitive proof that the country's firms are acting irrationally or are unaware of the better technologies.

Economic Rationale for Outdated Technology

Economic Rationale for Labor-Intensive Technology

Match each economic condition with the corresponding technology choice and its graphical representation.

In an economic model explaining why older, more labor-intensive technologies persist in some regions, what is the primary factor that causes the isocost line to be very flat, making these older methods the least-cost option?

An economy has historically relied on production methods that require a large amount of labor and very little machinery. If this economy experiences a sustained and significant increase in its average wage level, while the cost of machinery remains stable, what is the most probable long-term outcome for its industries?

Policy Evaluation for Industrial Modernization

A developing country's textile industry predominantly uses old, manually operated looms, which require a large workforce but little capital investment. A new, automated loom technology exists that is far more productive but has a high purchase price. If a global innovation suddenly causes the price of these new automated looms to fall by 50%, but wages in the developing country remain unchanged and very low, what is the most likely impact on the country's textile industry?