Question: Hi tutor, I have this question don't really know how to solve it. Can you help me with that. Thank you ? Question 3 Suppose

Hi tutor, I have this question don't really know how to solve it. Can you help me with that. Thank you ?

Question 3 Suppose the production of automobiles requires two inputs, labour (L) and capital (K), in which the labour cost (w) is $20 per unit and the cost of capital (r) is $45 per unit. Consider Ford, an American car manufacturer, facing two choices of technologies to produce a compact car: Labour (L) Capital (K) Technology A 80 units 40 units Technology B 20 units 120 units a) Which technology would Ford choose? Explain your answer in detail. Draw the two isocost lines on a fully labelled diagram. b) Suppose the wage increases to $30 per unit and the cost of capital falls to $40 per unit. Draw the new isocosts on the same diagram in part (a). c) How does the change in input prices affect the rm's choice of technology? Is there any innovation rent? Explain. (1) Do your own research and write a short essay (between about 300-400 words) commenting on the competition in the electric vehicles (EVs) market and demand for EVs

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