The following table shows the marginal products of capital (K)and labour (L)for various methods for Firm ABC to produce 1000 toys per day. \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Production } \\ \text { Method } \end{array} & \text { MPK } _ { K } & \text { MP}_{L } \\ \hline \text { A } & 50 & 4 \\ \hline \text { B } & 45 & 8 \\ \hline \text { C } & 40 & 12 \\ \hline \text { D } & 35 & 16 \\ \hline \text { E } & 30 & 20 \\ \hline \text { F } & 25 & 24 \\ \hline \text { G } & 20 & 28 \\ \hline \end{array}\] TABLE 8- 2 -Refer to Table 8- 2.Suppose capital costs $6 per unit and labour costs $4 per unit and the firm is employing production method A.How should this firm adjust its use of capital and labour to minimize costs?

A) employ less capital and more labour B) employ more capital and less labour C) employ less capital and less labour D) employ more capital and more labour E) There is insufficient information to know. A) employ less capital and more labour B) employ more capital and less labour C) employ less capital and less labour D) employ more capital and more labour E) There is insufficient information to know.

The following table shows the marginal products of capital (K)and labour (L)for various methods for Firm ABC to produce 1000 toys per day. \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Production } \\ \text { Method } \end{array} & \text { MP } _ { K } & \text { MP}_{L} \\ \hline \text { A } & 50 & 4 \\ \hline \text { B } & 45 & 8 \\ \hline \text { C } & 40 & 12 \\ \hline \text { D } & 35 & 16 \\ \hline \text { E } & 30 & 20 \\ \hline \text { F } & 25 & 24 \\ \hline \text { G } & 20 & 28 \\ \hline \end{array}\] TABLE 8- 2 -Refer to Table 8- 2.If capital costs $6 per unit and labour costs $4 per unit,which production method minimizes the cost of producing 1000 toys per day?

A) method E B) method C C) method B D) method F E) method D A) method E B) method C C) method B D) method F E) method D

Exam 8: Producers in the Long Run

FIGURE 8- 4 -Refer to Figure 8- 4.The firm is initially producing 2000 units and minimizing its production cost at point D.Suppose the prices of capital and labour each rise by 10%.If the firm wishes to continue producing the same level of output it will

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Question 61

FIGURE 8- 4 -Refer to Figure 8- 4.The firm is initially minimizing the cost of producing 1000 units of output.Suppose the factor prices then change such that the price of capital (K)rises and the price of labour (L)falls.If the firm decides to keep its output unchanged,it will move toward the point

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Question 62

Consider a firm that uses only labour and capital.At the present use of labour and capital,the MP of labour is two times the MP of capital,and the price of labour is two times the price of capital.In order to minimize its costs,the firm should

(Multiple Choice)

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Question 63

In the long run,a profit- maximizing firm producing a given level of output chooses the production method that

(Multiple Choice)

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Question 64

FIGURE 8- 4 -Refer to Figure 8- 4.A firm that is producing an output of 1000 units will minimize its costs at point

(Multiple Choice)

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Question 65

The principle of substitution plays a central role in resource allocation because it demonstrates that

(Multiple Choice)

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Question 66

Consider the short- run and long- run cost curves for a firm.If there is an improvement in the firm's technology,

(Multiple Choice)

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Question 67

Suppose Farmer Smith hires 4 workers and leases 2 tractors and 15 hectares of farmland for one growing season,and produces 120 000 bushels of crop.The next year he hires 8 workers and leases 4 tractors and 30 hectares of farmland,and produces 210 000 bushels of crop.This firm (the farmer)is exhibiting returns to scale.

(Multiple Choice)

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Question 68

Which of the following paired concepts are equivalent to each other?

(Multiple Choice)

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Question 69

The long- run average cost curve is an envelope curve,with each point associated with a short- run average cost curve

(Multiple Choice)

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Question 70

Which of the following statements concerning long- run and short- run cost curves is correct?

(Multiple Choice)

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Question 71

FIGURE 8- 2 -Refer to Figure 8- 2.In the long run,the lowest- cost level of output achievable by this firm is

(Multiple Choice)

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Question 72

Which of the following is unlikely to be a source of increasing productivity?

(Multiple Choice)

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Question 73

FIGURE 8- 1 -Refer to Figure 8- 1.Which of the four firms in the figure is displaying constant returns to scale at all output levels?

(Multiple Choice)

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Question 74

The following table shows the marginal products of capital (K)and labour (L)for various methods for Firm ABC to produce 1000 toys per day. Production Method A 50 4 B 45 8 C 40 12 D 35 16 E 30 20 F 25 24 G 20 28 TABLE 8- 2 -Refer to Table 8- 2.Suppose capital costs $6 per unit and labour costs $4 per unit and the firm is employing production method A.How should this firm adjust its use of capital and labour to minimize costs?

(Multiple Choice)

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Question 75

For a firm with only two inputs,capital and labour,the condition MPK/MPL = PK/PL guarantees that the firm is

(Multiple Choice)

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Question 76

The following table shows the marginal products of capital (K)and labour (L)for various methods for Firm ABC to produce 1000 toys per day. Production Method A 50 4 B 45 8 C 40 12 D 35 16 E 30 20 F 25 24 G 20 28 TABLE 8- 2 -Refer to Table 8- 2.If capital costs $6 per unit and labour costs $4 per unit,which production method minimizes the cost of producing 1000 toys per day?

(Multiple Choice)

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Question 77

When a firm seeks to minimize costs of producing a given level of output,it does NOT need to know

(Multiple Choice)

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Question 78

Consider a firm that uses only labour and capital as inputs.At the present use of labour and capital,the MP of labour is four times the MP of capital,and the price of labour is twice the price of capital.In order to minimize its costs,the firm should

(Multiple Choice)

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Question 79

Suppose that capital costs $50 per unit and labour costs $20 per unit.If the marginal product of capital is 100 and the marginal product of labour is 30,a cost- minimizing firm should

(Multiple Choice)

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Question 80

Showing 61 - 80 of 127

FIGURE 8- 4 -Refer to Figure 8- 4.The firm is initially producing 2000 units and minimizing its production cost at point D.Suppose the prices of capital and labour each rise by 10%.If the firm wishes to continue producing the same level of output it will

FIGURE 8- 4 -Refer to Figure 8- 4.The firm is initially minimizing the cost of producing 1000 units of output.Suppose the factor prices then change such that the price of capital (K)rises and the price of labour (L)falls.If the firm decides to keep its output unchanged,it will move toward the point

Consider a firm that uses only labour and capital.At the present use of labour and capital,the MP of labour is two times the MP of capital,and the price of labour is two times the price of capital.In order to minimize its costs,the firm should

In the long run,a profit- maximizing firm producing a given level of output chooses the production method that

FIGURE 8- 4 -Refer to Figure 8- 4.A firm that is producing an output of 1000 units will minimize its costs at point

The principle of substitution plays a central role in resource allocation because it demonstrates that

Consider the short- run and long- run cost curves for a firm.If there is an improvement in the firm's technology,

Which of the following paired concepts are equivalent to each other?

The long- run average cost curve is an envelope curve,with each point associated with a short- run average cost curve

Which of the following statements concerning long- run and short- run cost curves is correct?

FIGURE 8- 2 -Refer to Figure 8- 2.In the long run,the lowest- cost level of output achievable by this firm is

Which of the following is unlikely to be a source of increasing productivity?

FIGURE 8- 1 -Refer to Figure 8- 1.Which of the four firms in the figure is displaying constant returns to scale at all output levels?

For a firm with only two inputs,capital and labour,the condition MPK/MPL = PK/PL guarantees that the firm is

When a firm seeks to minimize costs of producing a given level of output,it does NOT need to know

Consider a firm that uses only labour and capital as inputs.At the present use of labour and capital,the MP of labour is four times the MP of capital,and the price of labour is twice the price of capital.In order to minimize its costs,the firm should

Suppose that capital costs $50 per unit and labour costs $20 per unit.If the marginal product of capital is 100 and the marginal product of labour is 30,a cost- minimizing firm should

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