Question

How does the introduction of robots into an automobile factory illustrate the economic goal of efficiency?

Answer 1

Economic effiency is achieved when a company manages to obtain a certain level or production at a lower cost, or a larger amount of production at the same cost level as before.

In order to do so, the firm can either decrease the price it pays for the factors of production used in manufacturing (for example, decrease salaries or decrease the amount paid to suppliers etc.), which it not always possible, or introduce new technologies that optimize the production processes. The introduction of robots, will allow the firm to produce, in the same amount of time, a greater amount of units of its products and using an smaller labor force (cheaper in terms of factors used too). Therefore the firm will reach a higher level of efficiency and become more competitive when technological progress steps in the production processes.