Exam 8: Producers in the Long Run

The table below shows the number of units of labour and capital used in 4 alternative production techniques for producing 1000 widgets per month. TABLE 8-1 -Refer to Table 8-1. Which production technique is obviously technically inefficient?

The figure below shows a family of cost curves for a firm. The subscripts 1, 2, and 3 for the SRATC curves refer to different plant sizes. FIGURE 8-3 -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) falls and the price of labour(L) rises. If the firm decides to leave its output unchanged, it will now move toward the point

Of the following, which is the least likely to represent a firm's long-run decision?

The figure below shows the isocost lines and the isoquant map for a firm producing golf tees. FIGURE 8-6 -Refer to Figure 8-6.

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

Assume a firm is using 6 units of capital and 6 units of labour to produce 6 baskets. Now it doublesboth inputs resulting in a new total of 16 baskets being produced. This firm is experiencing

Any point representing a cost and output combination that is below the long-run average costcurve