A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.This affects

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The investment in technology will lead to a reduction in costs per unit, which will increase both economic and accounting profits. Economic profits are total revenue minus total costs (including opportunity costs), while accounting profits are total revenue minus explicit costs (such as wages and materials). By reducing the cost per unit of production, the company will decrease its total costs, leading to an increase in both economic and accounting profits.

A Manager Invests $400,000 in a Technology to Reduce Overall