Question : 1) Refer to Table 8-1. If the price of labour : 1384207

1) Refer to Table 8-1. If the price of labour is $5 and the price of capital is $10, which production technique minimizes the costs of producing 1000 units of output?

A) A

B) B

C) C

D) D

E) Any of the techniques have the same cost.

2) Refer to Table 8-1. If the price of labour is $10 and the price of capital is $5, which production technique minimizes the costs of producing 1000 units of output?

A) A

B) B

C) C

D) D

E) Any of the techniques have the same cost.

3) Refer to Table 8-1. If the price of both labour and capital is $10, which production technique minimizes the costs of producing 1000 units of output?

A) A

B) B

C) C

D) D

E) Any of the techniques have the same cost.

4) Refer to Table 8-1. Which production technique is obviously technically inefficient?

A) A

B) B

C) C

D) D

E) All four techniques are inefficient.

5) When there is no other way of producing a given level of output with a smaller total value of inputs, the firm is operating at

A) minimum cost.

B) maximum output.

C) maximum profit.

D) optimal output.

E) maximum cost.

6) Which of the following conditions indicate cost minimization, assuming two inputs, labour (L) and capital (K)?

A) PK ? MPK = PL ? MPL

B) MPL = MPK

C) MPK/PK = MPL/PL

D) MPK/PL = MPL/PK

E) PK = PL

7) By expressing the cost-minimizing condition as MPK/MPL = PK/PL, we are able to see

A) how the firm determines its profit-maximizing output.

B) how the firm can adjust the marginal products of the factors of production to the prices of the factors given by the market.

C) that the capital-labour ratio is fixed.

D) that the ratio of factor prices is constant over time.

E) that the firm is producing at a lower cost if the left-hand side of the equation is greater than the right-hand side.

8) For a firm with only two inputs, capital and labour, the condition MPK/MPL = PK/PL guarantees that the firm is

A) at its profit-maximizing output but is not necessarily minimizing its costs.

B) minimizing its costs but is not necessarily maximizing its profits.

C) technically efficient but not economically efficient.

D) economically efficient but not technically efficient.

E) at its profit-maximizing and cost-minimizing level of output.

9) A profit-maximizing firm will increase its use of capital and decrease its use of labour when the

A) marginal product of capital is higher than the marginal product of labour.

B) marginal product of capital, per dollar spent on capital, is greater than the marginal product of labour, per dollar spent on labour.

C) average product of capital is higher than the average product of labour.

D) total product of capital is higher than the total product of labour.

E) marginal product of capital, per dollar spent on capital, is less than the marginal product of labour, per dollar spent on labour.

10) When a firm seeks to minimize costs of producing a given level of output, it does NOT need to know

A) the available alternative methods of production.

B) the level of output that maximizes its profits.

C) the cost of the factors of production it uses.

D) its production function.

E) how its costs change as its production methods change.