The following data show the total output for a firm when specified amounts of labour are...

  

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The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. When answering the questions, you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100. Labour per unit of time Total Output 25 2 75 3 175 4 250 305 TABLE 7-4 13) Refer to Table 7-4. The marginal product of labour is at its maximum when the firm changes the amount of labour hired from 13) A) 0 to 1 unit. B) 1 to 2 units. C) 2 to 3 units D) 3 to 4 units. E) 4 to 5 units. 14) 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) that the ratio of factor prices is constant over time. C) how the firm can adjust the marginal products of the factors of production to the prices of the factors given by the market. D) that the capital-labour ratio is fixed. 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. 14) 15) Consider a firm that uses only labour and capital as inputs. At the present use of labour and capital, 15) the MP of labour is four times the MP of capital, and the price of labour is twice the price of capital. In order to minimize its costs, the firm should A) substitute capital for labour until their marginal products are equal. B) decrease both capital and labour. 9 stay at its present factor mix. D) increase both labour and capital. E) decrease capital and increase labour. 16) A firm trying to maximize its profits in the long run should A) charge the highest price. B) maximize the marginal product of all factors of production. ) charge the lowest price possible given the minimum possible cost. D) minimize the cost of producing the level of production it chooses. E) select the most technically efficient method of production regardless of the level of production. 16) The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. When answering the questions, you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100. Labour per unit of time Total Output 25 2 75 3 175 4 250 305 TABLE 7-4 13) Refer to Table 7-4. The marginal product of labour is at its maximum when the firm changes the amount of labour hired from 13) A) 0 to 1 unit. B) 1 to 2 units. C) 2 to 3 units D) 3 to 4 units. E) 4 to 5 units. 14) 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) that the ratio of factor prices is constant over time. C) how the firm can adjust the marginal products of the factors of production to the prices of the factors given by the market. D) that the capital-labour ratio is fixed. 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. 14) 15) Consider a firm that uses only labour and capital as inputs. At the present use of labour and capital, 15) the MP of labour is four times the MP of capital, and the price of labour is twice the price of capital. In order to minimize its costs, the firm should A) substitute capital for labour until their marginal products are equal. B) decrease both capital and labour. 9 stay at its present factor mix. D) increase both labour and capital. E) decrease capital and increase labour. 16) A firm trying to maximize its profits in the long run should A) charge the highest price. B) maximize the marginal product of all factors of production. ) charge the lowest price possible given the minimum possible cost. D) minimize the cost of producing the level of production it chooses. E) select the most technically efficient method of production regardless of the level of production. 16)

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13 Refer to Table 7 4 The marginal product of labour is at its maximum when the firm changes the amo... View the full answer