Discussion Coursework Example | Topics and Well Written Essays - 250 words - 37

Discussion - Coursework Example For the cost minimization situation of the firm is to choose a combination of input resources suitable for the desired output production that has the least cost. A production c minimizing input equation is a point on the isoquant for the given production function that is on the lowest point of the isocost line. The cost is minimal when the input combination is optimal. In the case of McDonalds, the choice of taking up automation is related to the increase in wages. An increase in wages results to an increase in the cost of production. For McDonalds to have the minimal input combination it is advisable to adopt automation, which will reduce the input cost, since the automation will be more accurate in taking orders and there is no fatigue so the service is executed evenly throughout the day. In addition, costs attributed to labor such as holiday leave or medical insurance will be removed. Therefore, an increase in wages will increase the output production cost, for MacDonalds to operate at the minimal cost it will take the lowest optimal point on the isocost and isoquant curve. This suggests that it must adopt automation to reduce the production cost to the