Final answer:
The correct answer is all of the above, as remedying an internal cost disadvantage involves increasing production efficiency, reducing labor costs, and implementing cost-cutting measures.
Step-by-step explanation:
Remedying an internal cost disadvantage often entails increasing production efficiency, reducing labor costs, and implementing cost-cutting measures. Therefore, the answer is 4) All of the above.
To elaborate, if the cost of machines has increased, a firm would likely shift towards using less capital and more labor to mitigate the increased costs, choosing a production technology such as production technology 2, which has the lowest total cost. Conversely, if there is a decrease in the cost of machine hours, a firm might shift in the direction of using more machines and less labor, opting for something like production technology 3 for its decreased total costs.
These decisions are affected by the cost structure presented in different production technologies. For instance, production technology 1 uses the most labor and least machinery, which becomes less attractive as labor costs increase. When labor costs rise, firms will substitute away from labor towards machinery, favoring technologies that increase efficiency and reduce reliance on expensive labor.