Question 1

For the firm mentioned in question 68,if the marginal product of B changes to 20,the firm should

Accepted Answer

The answer of For the firm mentioned in question 68,if...

Question 2

Costs are clearly minimized for a given level of output as long as the firm

Accepted Answer

The principle of cost minimization is based on the idea that a firm should produce a given level of output at the lowest possible cost. This can only be achieved if the firm is not able to increase output by substituting a dollar's worth of one input (A) for a dollar's worth of another input (B), or vice versa. If such substitution is possible, the firm would not be producing at the lowest possible cost. Therefore, choice C is the best option as it ensures that costs are minimized for a given level of output.

Question 3

To maximize its profit for a particular quantity of output,a firm should equate the

Accepted Answer

To maximize profit, a firm should ensure that the last dollar spent on any input yields the same amount of additional output across all inputs. This is achieved by equating the marginal product per dollar spent on each input, which ensures the most efficient allocation of resources.

Question 4

Under diminishing marginal returns,as the amount of a variable input is reduced,the marginal product of a dollar's worth of the input will

Accepted Answer

Under diminishing marginal returns, as the amount of a variable input is reduced, the marginal product of that input increases. This is because the remaining inputs are used more efficiently, leading to an increase in the output produced per unit of input.

Question 5

A production technique is essentially a

Accepted Answer

A production technique is a given combination of inputs, such as labor, capital, and technology, used to produce a particular level of output. It may involve the use of different inputs in different quantities or proportions to achieve the desired level of output. Market structure, public regulation, and length of time are not related to production techniques.

Question 6

The following question are based on the following table, which illustrates for a given level of wheat production the ratio of marginal products for different combinations of land and labor:
 
-If the price of land is $5 per unit and the price of labor is $2 per unit,then the least-cost combination of land and wheat is

Accepted Answer

The answer of The following question are based on the...

Question 7

Which of the following presents an optimal combination of inputs?

Accepted Answer

The optimal combination of inputs, according to the principle of cost minimization or profit maximization in economics, occurs when the ratio of the marginal product of labor to the marginal product of capital equals the ratio of the price of labor to the price of capital. This ensures that the last dollar spent on each input yields the same marginal benefit, leading to an efficient allocation of resources.

Question 8

A firm uses inputs A and B when the price of A is $3 per unit and the price of B is $5 per unit.The marginal product of A is 15 units.If the firm is making an optimal input decision,the marginal product of B must be

Accepted Answer

To make an optimal input decision, a firm should equate the ratio of the marginal products of inputs to the ratio of their prices. Given the marginal product of A is 15 and its price is $3, for B with a price of $5, the marginal product of B should be such that (15/3) = (MP_B/5). Solving this equation gives MP_B = 25, making choice D correct.

Question 9

If inputs are combined so that their marginal product-price ratios are equal,________ minimized.

Accepted Answer

When inputs are combined in such a way that their marginal product-price ratios are equal, it ensures that the cost of production is minimized. This is because the firm is allocating its resources in the most efficient way possible, getting the most output per unit of input without wasting resources or spending more than necessary.

Question 10

If for a firm the price of input A is four times the price of input B,costs will be minimized for a given level of output when the

Accepted Answer

The cost-minimizing condition for a firm is where the ratio of the marginal product of each input to its price is equal across all inputs. In this case, since input A is four times the price of input B, the firm should use more input B to compensate for the difference in price. This means that the marginal product of input B will be higher than that of input A, so the firm should use less input A relative to input B. Therefore, the marginal product of input A should be four times greater than that of input B.

Question 11

The following question are based on the following table, which illustrates for a given level of wheat production the ratio of marginal products for different combinations of land and labor:
 
-If the price of land falls to $4 per unit and the firm wishes to hold output constant,it should choose combination

Accepted Answer

The answer of The following question are based on the...

Question 12

Which of the following was NOT used by firms in the soft drink,automobile,and newspaper industries shown in The Business Firm video as a way to reduce costs in a competitive environment?

Accepted Answer

The answer of Which of the following was NOT used...

Question 13

If the ratio of the marginal product of labor to the marginal product of land is 1:3,a firm making an optimal input combination should

Accepted Answer

The correct answer is based on the principle of cost minimization in production, where the ratio of the marginal products (MP) of inputs should equal the ratio of their prices for an optimal input combination. If the MP of labor to land is 1:3, to minimize costs, a firm should pay each worker one-third as much as the price of a unit of land, ensuring the cost per unit of output is minimized across inputs.

Question 14

The use of computerized photo composition methods allowed the Asbury Park Press to

Accepted Answer

The use of computerized photo composition methods allows for the customization of editions to target specific regions, as the technology enables newspapers to easily modify content without having to physically reprint their pages. This means that newspapers like the Asbury Park Press could tailor their editions to address the interests and concerns of particular neighborhoods or communities they serve, thereby potentially increasing readership and advertising revenue.

Question 15

The law of diminishing returns requires the assumption that

Accepted Answer

The law of diminishing returns states that as one input factor is increasing while other factors are held constant, the marginal output will eventually decrease. This means that at least one input factor must be fixed for this law to hold true. Therefore, option E "at least one input must be fixed" is the best choice.

Quiz 3: The Business Firm: Organization,motivation,and Optimal Input Decisions