Question :
31) Refer to Table 8-2. If capital costs $6 per : 1384210
31) 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 B
B) method C
C) method D
D) method E
E) method F
32) 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 more capital and less labour
B) employ less capital and more labour
C) employ more capital and more labour
D) employ less capital and less labour
E) There is insufficient information to know.
33) 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?
A) employ more capital and less labour
B) employ less capital and more labour
C) employ more capital and labour
D) employ less capital and labour
E) There is insufficient information to know.
34) 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.
A) method B
B) method C
C) method D
D) method E
E) method F
35) Canada has a much lower population density than does Japan. Therefore, the price of land (relative to the price of labour) is lower in Canada than in Japan. Consider a Canadian firm and a Japanese firm, both producing rice, both having access to the same technologies, and both striving to minimize their costs. The Canadian firm will use the two inputs, land and labour, in such a way that its land/labour ratio is
A) equal to that of the Japanese firm.
B) lower than that of the Japanese firm.
C) higher than that of the Japanese firm.
D) indeterminate as there is insufficient information to know.
E) equal to one.
36) Canada has a much lower population density than does Japan. Therefore, the price of land (relative to the price of labour) is lower in Canada than in Japan. Consider a Canadian firm and a Japanese firm, both producing rice, both having access to the same technologies, and both striving to minimize costs. Now suppose that the relative price of land rises in Canada but remains the same in Japan. The effect on the use of inputs will be to
A) increase the land/labour ratio for both the Canadian and the Japanese firms.
B) decrease the land/labour ratio for both the Canadian and the Japanese firms.
C) increase the land/labour ratio for the Canadian firm.
D) decrease the land/labour ratio for the Canadian firm.
E) not change the land/labour ratio for either firm.
37) Consider a firm in the long run that is trying to maximize its profits. It should
A) select the most technically efficient method of production regardless of the level of production.
B) maximize the marginal product of all factors of production.
C) charge the highest price.
D) minimize the cost of producing whatever level of output it chooses.
E) charge the lowest price possible given the minimum possible cost.
38) One hundred years ago, in North America and Europe it was commonplace for middle class households to employ housemaids. As you know, this is quite rare today. Most such households now have dishwashers, washing machines and dryers. What is an explanation of this change?
A) Over long periods of time, labour is always replaced by capital.
B) Over long periods of time, capital is always replaced by labour.
C) Households substituted away from a factor whose price was falling (labour) and toward a factor whose price was rising (capital).
D) Households substituted away from an increasingly expensive factor (labour) and toward an increasingly inexpensive factor (capital).
E) The marginal product of labour was falling over time while the marginal product of capital was rising.
39) Which of the following is unlikely to be a source of increasing productivity?
A) better raw materials even if there are no changes in factor quantities or proportions
B) better organization of production
C) substitution toward labour and away from capital (with constant technology)
D) better-trained labour
E) increases in technological know-how
40) The long-run average cost (LRAC) curve shows
A) the lowest unit cost at which the firm can produce a given output.
B) the highest unit costs of producing a given output.
C) the operation of the law of diminishing returns.
D) what happens to the fixed costs in the long run.
E) the same as the short-run average cost curve.
