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Q. Cheapening of Materials and Equipments?
Expansion of an industry increases the demand for different kinds of materials and capital equipments. This will result in large scale production of equipments andmaterials. Large scale production will decrease their cost of production and so their prices. Therefore the firms employing them will get them at lower prices.
A firm is employing 100 hours of labor and 50 tons of cement to produce 500 blocks. Labor costs Rs 4 per hour and cement costs Rs 12 per ton. For the quantities employed MPL = 3 an
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Prices of the factors of production As the prices of those factors of production used intensively by X producers rise, so do the firms' costs. This cause supply to fall as some
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