Final answer:
Firms might shift spending towards training in labor skills and product knowledge when there is a rise in machinery costs, suggesting a move to more labor-intensive production models.
Step-by-step explanation:
Regarding the expenditure of training dollars and time on technical skills and product knowledge, a company’s decision depends on its specific industry and job roles. However, if we consider the context provided about a firm choosing production technology 2 due to the lowest total cost, and with the factor of machine costs rising, this could hint that we are discussing a shift within the company towards a more labor-intensive production model. This would align with a business strategy that might spend more on hands-on training, labor skills, and product knowledge rather than technical skills related to capital-intensive processes, due to the increased cost of machinery.