Suppose That a Worker in Country a Can Make Either

question 38

Multiple Choice

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country A would be using resources efficiently if it was producing:

• A) (500 iPhones, 100 iPads).
• B) (500 iPhones, 150 iPads).
• C) (500 iPhones, 200 iPads).
• D) (500 iPhones, 250 iPads).

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Definitions:

Marginal Productivity Theory

A principle in economics that suggests that the addition of a unit of labor or capital leads to a change in output, essentially quantifying the extra output produced by adding one more unit of a resource.

Equilibrium Value

The price and quantity at which the supply of an item equals the demand for that item, achieving a balance in the market.

Marginal Product

The additional output that is produced as a result of utilizing one more unit of a variable input, holding other inputs constant.

Equilibrium Quantity

The level of goods or services offered and demanded at the price of equilibrium.