Final answer:
The most appropriate cost driver for electric power used by machines is the d. number of machine hours, as it directly reflects the power consumption. Firms adjust their use of technology based on the cost of machine hours, choosing options that offer the lowest total cost whether it be a more machine-intensive or labor-intensive production method.
Step-by-step explanation:
The most appropriate cost driver of electric power used by machines is likely to be d) Number of machine hours. This metric directly correlates to the use of electricity because the more hours a machine operates, the more power it consumes.
Both the size of the machine and the purchase cost are one-time attributes and do not affect the ongoing electricity usage, while the number of production runs might not accurately reflect the intensity or duration of machine use.
Indeed, if a firm is faced with cheaper machine hours, a strategic decision could be to shift towards an operational model that utilizes more machines and less labor, optimizing for the most cost-effective production technology.
For instance, if the cost related to the use of machines decreases, selecting production technology 3 with the lowest total cost would be sensible. Conversely, when machine costs increase, a shift towards technology 2 which is now the more economical option, signals a move to less capital and more labor-intensive methods.