Exam 8: Producers in the Long Run

Suppose that capital costs $8 per unit and labour costs $4 per unit.For a profit - maximizing firm operating at its optimal factor mix,if the marginal product of capital is 60,the marginal product of labour must be

Suppose a firm employs two inputs,X and Y,and that at their current levels of use MPX/PX > MPY/PY.To minimize the cost of production,the firm should hire

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. TABLE 8-2 -Refer to Table 8-2.Suppose capital costs $80 per unit and labour costs $24 per unit.Which production method minimizes the cost of producing 1000 toys per day.

Which of the following statements most accurately makes the distinction between the long run and the very-long run with respect to the long-run average cost (LRAC)curve?

Assume a firm is using 10 units of capital and 10 units of labour to produce 10 widgets per hour.By doubling both inputs the result is a doubling of output.This firm is experiencing

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. 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?

If a firm is using labour and capital such that the MP of labour is two times the MP of capital,and the price of labour is four times the price of capital,the firm should ________ in order to minimize its costs of producing its output.

Suppose a firm is using 1500 units of labour and 20 units of capital to produce 100 tonnes of mineral ore.The price of labour is $20 per unit and the price of capital is $1000 per unit.The MPL equals 25 and the MPK equals 750.In this situation,

Suppose a firm is using 1500 units of labour and 20 units of capital to produce 100 tonnes of mineral ore.The price of labour is $40 per unit and the price of capital is $1000 per unit.The MPL equals 25 and the MPK equals 750.In this situation,

Suppose a firm is using 100 units of labour and 50 units of capital to produce 200 completed client tax returns per day.The price of labour is $5 per unit and the price of capital is $2 per unit.The MPL equals 5 and the MPK equals 2.In this situation,the firm

Economists collect and analyze data on output per worker and output per hour of work.What are they trying to measure by doing so?

What is meant by the term ʺincreasing returns to scaleʺ?

Suppose a firm moves from one isoquant to an isoquant further from the origin on an isoquant map.This movement indicates that

A short-run average total cost curve and a long-run average cost curve are tangent

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

Suppose RioTintoAlcan is considering the construction of a new aluminum smelter in Northern Quebec,the operation of which requires a great deal of electricity.Suppose also that the price of electricity is predicted to rise significantly in the near future.As a result,the firm decides to embark on new research and development which leads to the development of a new production technique that uses less electricity per tonne of aluminum produced.This is an example of

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. TABLE 8-2 -Refer to Table 8-2.Suppose the firm is employing production method G.How should this firm adjust its use of capital and labour in order to minimize costs?

Suppose a shipping company employs 2000 workers,operates 400 delivery trucks and makes 1.5 million domestic shipments in one year.The next year they increase their workforce to 3000 workers,operate 600 trucks and make 2.8 million domestic shipments in one year.This firm is exhibiting returns to scale.

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

Increasing returns to scale for a firm is shown graphically by