A Firm Can Use 5 Workers and 10 Machines, 7

question 109

Multiple Choice

A firm can use 5 workers and 10 machines, 7 workers and 9 machines, or 8 workers and 9 machines to produce four cars. If each worker costs $200 and each machine is rented for $50, the economically efficient input combination is:

• A) 5 workers and 10 machines.
• B) 7 workers and 9 machines.
• C) 8 workers and 9 machines.
• D) 12 workers and 19 machines.

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Definitions:

Alternative Hypothesis

A statement that contradicts the null hypothesis and is tested to determine if there is significant evidence to support it.

Test Statistic

A value calculated from sample data used to make a decision on whether to reject the null hypothesis.

Null Hypothesis

A default hypothesis that there is no significant effect or difference, usually tested against an alternative hypothesis in statistical analysis.

Indicator Variable

A variable used in statistical modeling and analysis that assigns a value of 0 or 1 to note the absence or presence of a particular condition or attribute.