1. Based on the information in Figure 2, illustrate in a diagram how Bruno would decide to use more robots in his firm to minimise production costs. Your diagram should have the number of workers on the horizontal axis and the number of robots on the vertical axis. It is not necessary to use specific numbers.

2. Explain in 100-130 words why the market for industrial robots have expanded in the last couple of decades as shown in Figure 1. You must refer to the information from Figure 2 and the diagram you drew in the previous question.

3. Draw the production function of Bruno’s firm. Your diagram should have the number of workers on the horizontal axis and the number of windscreens on the vertical axis. Illustrate the effect of Bruno’s decision to use more robots on his production function. Briefly explain your diagram within 50 words.

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Automation, broadly referring to the adoption of machines and computers in the production process has become increasingly more popular across many sectors and countries. For example, the market for industrial robots has experienced a dramatic expansion in the last couple of decades, as shown in Figure 1. Figure 1 Annual shipments of industrial robots worldwide (thousand units) 630 Gall At the same time, the prices of labour and robots have been changing. The case of the US manufacturing sector in the last few decades is shown in Figure 2. 100 80 60 40 1990 1996 2010 Figure 2: Robot prices and labour compensation in manufacturing in the US (1990-100) 220 200 180 160 140 120 2000 2006 2010 Source: Modified from Exhibit 2, McKinsey & Company, Industrial Robotics: Insights into the Sector s Future Growth Dynamics, July 2019. Labor costs Robot prices Note: Forecast 2018-2021 Source: Tilley, Jonathan, Automation, Robotics, and the Factory of the Future , September 7, 2017, McKinsey & Company. Now, consider Bruno, who owns a small manufacturing firm and produces windscreens for automobiles. Currently Bruno uses two robots and ten workers including Angela in his production. Automation, broadly referring to the adoption of machines and computers in the production process has become increasingly more popular across many sectors and countries. For example, the market for industrial robots has experienced a dramatic expansion in the last couple of decades, as shown in Figure 1. Figure 1 Annual shipments of industrial robots worldwide (thousand units) 630 Gall At the same time, the prices of labour and robots have been changing. The case of the US manufacturing sector in the last few decades is shown in Figure 2. 100 80 60 40 1990 1996 2010 Figure 2: Robot prices and labour compensation in manufacturing in the US (1990-100) 220 200 180 160 140 120 2000 2006 2010 Source: Modified from Exhibit 2, McKinsey & Company, Industrial Robotics: Insights into the Sector s Future Growth Dynamics, July 2019. Labor costs Robot prices Note: Forecast 2018-2021 Source: Tilley, Jonathan, Automation, Robotics, and the Factory of the Future , September 7, 2017, McKinsey & Company. Now, consider Bruno, who owns a small manufacturing firm and produces windscreens for automobiles. Currently Bruno uses two robots and ten workers including Angela in his production.