Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

B. Reduce the quality of the input used by using a cheaper form of the input:

The reduction in quality should bring with it a reduction in the rate paid for the input.

Use input with lower Performance: Less Function:
Slower speed

No. Industry SIC Year Notes
1 0 2007 In response to rising airfare and hotel costs, business travelers with more flexible schedules are opting for train travel rather than pricey flights. Often, internet is available, allowing employees to work during the journey. Trains are also more likely to run on schedule.
2 7375 2005 Google saves millions of dollars by using cheap consumer class servers to power its search algorithm. The company realized early on that consumer priced technology was as good as business priced technology, thus the company pours its resources on hiring bright people and not into buying the fastest boxes. The company believes advantages are to be found in clever use and not the hardware itself. Google has an annual cash flow of $400 million, exceeding that of older Web superstars with greater annual sales, EBay and Yahoo.

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