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

question 134

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.
TABLE 8-2
-Refer to Table 8-2.Suppose capital costs $80 per unit and labour costs $24 per unit.Which production method minimizes the cost of producing 1000 toys per day.

• A)method B
• B)method C
• C)method D
• D)method E
• E)method F

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Definitions:

Optimal Factor Choice

A decision-making process in which a firm determines the most efficient combination of factors of production (labor, capital, etc.) to maximize output or minimize costs.

Weak Axiom of Cost Minimization (WACM)

An economic principle stating that if a set of goods is chosen over another set at the same prices, then the chosen set should not cost more than the other when prices change.

Input Bundle

A combination of resources or inputs used in the production of goods and services.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.