Final answer:
The second general category of production, apart from mass production, is customized production. Customized production tailors products to meet individual customer needs and is one of several production approaches, including batch, continuous, and intermittent production. The choice of production technology depends on the relative costs of labor and machinery.
Step-by-step explanation:
The two general categories of production are (i) mass production and (ii) customized production. While mass production involves manufacturing large quantities of standardized products, often using assembly lines and automation, customized production is tailored to meet the specific demands of individual customers, making each product distinct. An alternative approach to these would be batch production, where items are produced in groups or batches, and continuous production, where the production process is ceaseless and materials flow continuously through the production system. Lastly, there is intermittent production, which operates on a start-and-stop basis, depending on demand or the need to replenish inventory.
Given the options presented, production technology 1, with 10 workers and 2 machines, represents a more labor-intensive technique relative to production technology 3, which might be more machinery intensive. When costs of machinery increase, firms like the one in question might move towards production technology 2 with 7 workers, aiming to achieve a balance between labor and capital that offers the lowest total cost. As a result of the increasing costs, a firm will typically shift towards a production technology that relies less on the costly resource and more on the cheaper ones. This cost-efficient strategy is essential in business for maintaining competitive advantage and profitability.