Which of the following would lower costs?
A. Higher cost inputs
B. Using more input per unit of output
C. An increase in efficiency
D. None of the above
Answer (2)
Higher cost inputs increase costs.
Using more input per unit of output increases costs.
An increase in efficiency lowers costs.
Therefore, the answer is an increase in efficiency: An increase in efficiency .
Explanation
Analyzing the Options We need to determine which of the given options would result in lower costs. Let's analyze each option:
Higher cost inputs: If the inputs required for production become more expensive, the overall cost of production will increase. Therefore, this option would not lower costs.
Using more input per unit of output: If it takes more resources (input) to produce the same amount of product (output), this means that production is less efficient, and costs will increase. Therefore, this option would not lower costs.
An increase in efficiency: If production becomes more efficient, it means that less input is required to produce the same amount of output. This would lead to lower costs. Therefore, this option would lower costs.
None of the above: This option would only be correct if none of the other options would lower costs. Since option 3 would lower costs, this option is incorrect.
Determining the Correct Answer Based on the analysis, an increase in efficiency would lower costs.
Final Answer The correct answer is an increase in efficiency.
Examples
In a bakery, if the bakers find a way to use less flour and sugar to bake the same number of cakes (increase in efficiency), the cost of making each cake will decrease, leading to higher profits. Similarly, a car manufacturer that improves its production process to use fewer materials and less energy to produce each car will lower its production costs, making the cars more competitive in the market. Efficiency gains are crucial for businesses to reduce costs and improve profitability.
The option that would lower costs is an increase in efficiency, as it allows the same level of output using fewer resources. Higher cost inputs and using more inputs per unit of output both result in increased costs. Therefore, increasing efficiency is key to reducing costs.
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