Use the Following to Answer Questions: Table: Two Factories -(Table: Two Factories) If This Firm Is Producing 1 Unit

question 29

Multiple Choice

Use the following to answer questions: Table: Two Factories $$\begin{array} { c c c c } \hline \text { Output }& \begin{array} { c } \text { Factory l } \\\text { Marginal } \\\text { Output }\end{array} & \text { Output } & \begin{array} { c } \text { Factory 2 } \\\text { Marginal } \\\text { Cost }\end{array} \\\hline 0 & - & 0 & - \\1 & \$ 1.00 & 1 & \$ 0.50 \\2 & 2.00 & 2 & 1.00 \\3 & 3.00 & 3 & 1.50 \\4 & 4.00 & 4 & 2.00 \\5 & 5.00 & 5 & 2.50 \\6 & 6.00 & 6 & 3.00 \\\hline\end{array}$$
-(Table: Two Factories) If this firm is producing 1 unit from Factory 1 and 5 units from Factory 2, it should:

• A) produce 1 less unit in factory 2 and produce 1 more unit in Factory 1.
• B) produce all 6 units in Factory 2, the low-cost factory.
• C) not change production because it is minimizing costs.
• D) produce 1 unit in factory 2 and produce 5 more units in Factory 1.

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Definitions:

Productivity Growth

The increase in the efficiency of producing goods and services, typically measured as the output per unit of input over time.

World Output

The total economic production of goods and services by all countries in the world over a given period.

LDCs

Less Developed Countries, nations with low levels of industrialization, low income per capita, and generally poor standards of living.

NICs

Newly Industrialized Countries, which are in transition from developing to developed status due to rapid economic growth.