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  • MGTECO

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    Cristine Jagape Villarta
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    Capital investments are more tolerable than labor investments for a firm owner. While both increase costs, capital investments can improve efficiency and productivity through labor-saving machines. These machines can produce higher quality and greater quantities of goods compared to equivalent labor investments. It is also easier for an owner to manage higher capital costs through loans or investors. However, rising labor costs from hiring more employees requires paying higher wages and other expenses that could outweigh income at times. Therefore, if forced to choose, higher capital costs would be preferable to higher labor costs for a firm owner.

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    Capital investments are more tolerable than labor investments for a firm owner. While both increase costs, capital investments can improve efficiency and productivity through labor-saving machines. These machines can produce higher quality and greater quantities of goods compared to equivalent labor investments. It is also easier for an owner to manage higher capital costs through loans or investors. However, rising labor costs from hiring more employees requires paying higher wages and other expenses that could outweigh income at times. Therefore, if forced to choose, higher capital costs would be preferable to higher labor costs for a firm owner.

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    16 views2 pages

    MGTECO

    Uploaded by

    Cristine Jagape Villarta
    Capital investments are more tolerable than labor investments for a firm owner. While both increase costs, capital investments can improve efficiency and productivity through labor-saving machines. These machines can produce higher quality and greater quantities of goods compared to equivalent labor investments. It is also easier for an owner to manage higher capital costs through loans or investors. However, rising labor costs from hiring more employees requires paying higher wages and other expenses that could outweigh income at times. Therefore, if forced to choose, higher capital costs would be preferable to higher labor costs for a firm owner.

    Copyright:

    © All Rights Reserved
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    of 2

    Name: Cristine J.

    Villarta BSA 2A

    1. Do you agree that the least combination of input when Labor and Capital are of the same
    price? Discuss.

    2.  If you were the owner of the firm... which is more tolerable to have increased cost? labor or
    capital?  Discuss.
    If I were the firm’s owner, I would be willing to tolerate higher capital costs rather than higher
    labor costs. It's because capital investments are more bearable than labor investments
    because labor-saving machines frequently produce goods of higher quality and in greater
    quantities than corresponding labor investments.

    For instance, if the firm needs to increase its capital investment to satisfy public demand. It is
    easy for you to manage considering that you can either get a bank loan or find investors to
    invest in your company. With this investment, you can improve the efficiency of your company
    and meet customer demands. However, it will be difficult for you to manage if labor costs rise
    or if you need to hire more employees because you will have to pay them more and do other
    necessary things. There are times when expenses outweigh income. Overall, choosing to have
    a higher cost of capital is preferable.

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