Figure 11-14 Figure 11-14 Shows the Optimal Input Combinations for the Production

question 239

Multiple Choice

Figure 11-14

Figure 11-14 shows the optimal input combinations for the production of a given quantity of cotton in the United States and in China.
-Refer to Figure 11-14.Which of the following could explain why the United States and China use different input combinations to produce a given quantity of cotton and yet, each country produces that quantity at the lowest possible cost?

• A)because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in the United States
• B)because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in China
• C)because the United States has more sophisticated technology and therefore is more efficient in cotton production
• D)because the marginal product per dollar spent on capital yields a higher return in the United States than in China

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Credit Period

The duration of time allowed by a seller to the buyer to pay for the goods or services received, without incurring any additional costs.

Probability of Default

The likelihood that a borrower will fail to meet their debt obligations.

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A type of personal loan that allows individuals to purchase goods or services with the promise to pay for them later.

Net Present Value

The discrepancy between cash inflows' present value and cash outflows' present value over a time frame, employed in capital budgeting for evaluating an investment's profitability.