Wooden Toys

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First, I claim that it is alway better for the firm to use all of its labour units (i.e. labour always = 350). Let us consider the most extreme case. Suppose that the firm pays $10/hour for every labour hour, and $4 for each unit of wood (note that the cost cannot be higher than this). For line 1, when every 1 labour and 4 wood is consumed (which is $26), 1 car and 2 planes are produced (which is worth $85). For line 2, whenever 1 labour and 5 wood is consumer ($30), 3 cars ...