Refer to the Following

question 44

Multiple Choice

Refer to the following:

A producer is hiring 20 units of labor and 6 units of capital (bundle A) . The price of labor is $10, the price of capital is $2, and at A, the marginal products of labor and capital are both equal to 20.

-Beginning at A, if the producer increases expenditures on labor by $1 and decreases expenditures on capital by $1, then

• A) cost remains constant and output decreases by 8 units.
• B) cost remains constant and output increases by 12 units.
• C) cost remains constant and output increases by 20 units.
• D) output remains constant and cost increases by $8.
• E) output remains constant and cost decreases by $2.

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Definitions:

Cheque

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.

Honour

A quality that combines respect, being esteemed, and a sense of ethical conduct.

Bill of Exchange

A written, unconditional order by one party directing another party to pay a specified sum of money to a third party on demand or at a future date.

Liable

Legally responsible or obligated.