Final answer:
The choice between job order costing system and process costing system depends on whether a company's products are custom or homogeneous. Decisions on production technology are influenced by the relative costs of labor and capital, reflecting broader economic trends such as those observed in the United States during the 1970s.
Step-by-step explanation:
Whether companies would use a job order costing system or a process costing system depends on their production processes and business models. A job order costing system is typically used by companies with distinct, custom products or jobs such as in construction, custom manufacturing, and professional services. Conversely, a process costing system is most likely employed by companies that produce large volumes of homogeneous products, such as in chemical processing, oil refining, and food production.
Decisions on production technology and the balance between labor and capital are determined by cost analysis. If machine hours become cheaper, a firm may opt for more capital-intensive production (production technology 3) whereas if machine costs increase, a shift toward more labor-intensive production (production technology 2) could be preferred. These decisions often reflect changes in the economic environment, such as the 1970s situation in the United States, where limited market demand influenced the long-term sustainability of firms.