what should be the most efficient level of output of two products?

Question

one unit of product 1 product requires one man hour, one machine hour,and two units of the raw material. similarly, one unit of product 2 requires three man hour, one machine hour,and one units of the raw

Answer 1

Labour is usually more costly than raw materials. Both products use the same machine time so this factor balances out between the two products. If m is the labour cost and r is the cost of one 1 unit of raw material, the (product 2 costs) - (product 1 costs)=3m+r-(m+2r)=2m-r. So, if 2m>r product 2 costs more to produce, therefore product 1 is more efficient.