The Following Table Shows the Marginal Products of Capital (K)

question 92

Multiple Choice

The following table shows the marginal products of capital (K) and labour (L) for various methods for Firm ABC to produce 1000 toys per day. $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Production } \\\text { Method }\end{array} & \text { MPK } & \text { MPL } \\\hline \text { A } & 50 & 4 \\\hline \text { B } & 45 & 8 \\\hline \text { C } & 40 & 12 \\\hline \text { D } & 35 & 16 \\\hline \text { E } & 30 & 20 \\\hline \text { F } & 25 & 24 \\\hline \text { G } & 20 & 28 \\\hline\end{array}\\\text { TABLE 8- } 2\end{array}$$
-Refer to Table 8- 2. As this firm switches from production method A to production method G, production is

• A) remaining at a cost- minimizing level of output.
• B) becoming more labour intensive and less capital intensive.
• C) becoming more profitable.
• D) becoming more capital intensive and less labour intensive.
• E) moving farther and farther away from cost minimization.

---

Definitions:

Absorption Costing

A cost accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Inventory Levels

The quantity of goods or materials a company has available at any given time, crucial for meeting customer demand and optimizing production.

Variable Costing

An accounting method in which fixed manufacturing overhead costs are not allocated to products, affecting stock valuation and profitability reporting.

Manufactured Quantity

Manufactured quantity refers to the total number of units produced by a company during a specified period.