Question :
37) Suppose two countries use different combinations of inputs, such : 1387773
37) Suppose two countries use different combinations of inputs, such as labor and capital, to produce the same product. This implies all of the following except that
A) the two countries use different technologies to produce the product.
B) the inputs are not equally productive in the two countries.
C) the prices of the inputs are not the same in the countries.
D) one country is more efficient in the production of the good than the other.
38) Suppose a firm uses labor and capital to produce output. The last unit of labor hired has a marginal product of 12 units of output, and the last unit of capital employed has a marginal product of 20 units. Use the optimal combination of inputs rule to calculate the price of capital if the price of labor is $6 per unit. The price of capital is
A) $2.
B) $10.
C) $20.
D) impossible to determine with the information given.
Figure 11-17
39) Refer to Figure 11-17. Assume that production isoquants are convex. Total cost and output produced must increase for each of the following movements except one. Which movement is the exception?
A) point a to point b
B) point a to point c
C) point b to point c
D) point b to point d
40) A firm’s expansion path
A) is the same thing as its long-run average cost curve.
B) is a curve that shows a firm’s cost-minimizing combination of inputs for every level of output, holding input prices constant.
C) shows the targeted growth rate in sales over the long run.
D) is a curve that shows expected profits at various price levels.
Figure 11-18
41) Refer to Figure 11-18. Starting from point d a movement along isoquant1 to point f
A) increases the total cost of production with no change in output.
B) increases output but not the total cost of production.
C) increases the total cost of production and decreases output.
D) increases both the total cost of production and output.
42) Refer to Figure 11-18. Starting from point e, a movement along the isocost to point f
A) decreases the total cost of production but not output.
B) increases the total cost of production and decreases output.
C) decreases both the total cost of production and output.
D) decreases output but not the total cost of production.
43) Refer to Figure 11-18. A curve that connects points a, d and e is called
A) an input-output curve.
B) a total cost line.
C) an expansion path.
D) an indifference line.
44) The financial success of the movies The Lion King and Toy Story led to
A) a decrease in the salaries of animators and an increase in the number of animators used to produce films.
B) an increase in demand for actors to play roles in animated films.
C) the Disney studio’s attempt to buy Pixar Animation Studios.
D) a reduction in the price of computers and software relative to the price of labor (animators) used to produce animated films.
45) Joan Jillson owns a coffee shop. Assume that the marginal product of the labor Joan employs (MPL) equals 500 cups per week and the marginal product of her shop’s capital (MPK) equals 1,000. Assume also that the wage (w) Joan pays her workers equals $250 per week and the rental price (r) of her capital – her coffee machines – equals $500 per week. Which of the following correctly analyzes whether Joan is minimizing her costs?
A) No, Joan is not minimizing her costs because MPK is greater than MPL and r is greater than w.
B) Yes, Joan is minimizing her costs because MPK/r equals MPL/w.
C) No, Joan is not minimizing her costs because MPL × w is less than MPK × r.
D) Yes, Joan is minimizing her costs because the she is a price-taker in the markets for labor and capital.
46) Economists Cade Massey and Richard Thaler analyzed whether teams in the National Football League distributed salaries efficiently. Massey and Thaler found that
A) the first few players selected in first round of the NFL draft are paid much higher salaries relative to their marginal products than players drafted later in the first round.
B) rookies are paid salaries greater than their marginal products; veteran players are paid salaries less than their marginal products.
C) veteran players who sign as free agents are paid more relative to their marginal products than rookie players selected in the first round of the draft.
D) both rookie players and veteran players are paid less than the value of their marginal products because of the lack of competition among teams.
