Question : Figure 11-14 Figure 11-14 shows the optimal input combinations for the : 1387771

 

Figure 11-14

 

Figure 11-14 shows the optimal input combinations for the production of a given quantity of cotton in the United States and in China.

 

17) Refer to Figure 11-14. Consider the following statements:

a.For each country, the marginal product per dollar spent on labor equals to the marginal product per dollar spent on capital.

b.The price of labor is relatively higher in the United States than in China and the price of capital is relatively lower in the United States than in China.

c.The price of labor and the price of capital are relatively higher in the United States than in China. Based on the figure, which of the statements above is true?

A) All of the statements are true.

B) statements a and c only

C) statements a and b only

D) statements b and c only

 

18) Refer to Figure 11-14.  Which of the following could explain why the United States and China use different input combinations to produce a given quantity of cotton and yet, each country produces that quantity at the lowest possible cost?

A) because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in the United States

B) because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in China

C) because the United States has more sophisticated technology and therefore is more efficient in cotton production

D) because the marginal product per dollar spent on capital yields a higher return in the United States than in China

 

 

Figure 11-15

 

 

19) Refer to Figure 11-15.  What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

A) combination e: 10 hours of labor and 48 units of capital

B) combination f: 40 hours of labor and 24 units of capital

C) combination g: 60 hours of labor and 14 units of capital

D) combination h: 60 hours of labor and 9 units of capital

 

20) Refer to Figure 11-15.  Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit. What is the minimum cost of producing 200 gooseberry pies?

A) $3,600

B) $1,120

C) $592

D) $560

 

 

21) Refer to Figure 11-15.  Suppose Hilda produces 100 gooseberry pies. What is the marginal rate of technical substitution of labor for capital when labor is increased from 10 to 20 hours?

A) 1 unit of capital

B) 10 units of capital

C) 14 units of capital

D) 24 units of capital

 

 

22) Maximizing the level of output for a given total cost of production

A) is equivalent to producing the profit maximizing output level.

B) is equivalent to minimizing cost for a given level of output.

C) necessitates using only relatively low-priced inputs.

D) will maximize total revenue.

 

23) An expansion path shows

A) the level of sales necessary for a firm if it wants to expand.

B) the level of long-run average cost at different scales of operation.

C) the least-cost combination of inputs for each level of output.

D) the returns to scale at each level of output.

 

 

24) A curve that shows all the combinations of two inputs, such as labor and capital, that will produce the same level of output is called

A) an isoquant.

B) an isocost line.

C) a budget line.

D) an optimal input combination curve.

 

 

25) The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

A) opportunity cost of inputs.

B) marginal rate of technical substitution.

C) input trade-off rate.

D) isoquant substitution rate.

 

26) The typical shape of an isoquant is

A) convex towards the origin.

B) concave towards the origin.

C) linear and downward sloping.

D) linear and upward sloping.