Final answer:
The student's question relates to the business decision to invest in machinery instead of labor when faced with increased wages. This action is driven by the goal to improve labor productivity and manage production costs.
Step-by-step explanation:
The analysis of a company's decision to invest in plant facility upgrades, in response to rising wages, falls under the domain of business and economic principles. For instance, as the wage rises to $24 an hour, the firm finds it economical to adopt a production plan involving fewer hours of labor and a greater use of machinery. The investment in physical capital is meant to increase labor productivity by 25%, making union workers more productive with better equipment. However, an inevitable trade-off includes hiring fewer workers due to increased mechanization. This scenario ties directly into concepts of labor productivity, cost management, and the impact of union wage negotiations on company production methods.