Answer the Question Using the Following Data, Which Show All

question 15

Multiple Choice

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity. If a new production technique is developed that enables a firm to produce 20 units of output with 3 units of land, 3 of labor, 1 of capital, and 2 of entrepreneurial ability, this technique would

• A)not be adopted because, although it reduces production costs, it does not increase profit.
• B)be adopted because it would lower production costs and increase economic profit.
• C)not be adopted because it entails higher production costs than other available techniques.
• D)be adopted, even though economic profits would be reduced slightly.

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Definitions:

Preexisting Duty

An obligation or duty that already exists under a contract, and performing it, therefore, does not constitute consideration for a new promise.

Law

Rules devised and applied by institutions of society or the government to modulate behavior.

Legally Sufficient Value

An acceptable form or measure of value that must be provided in a contract to make it binding and enforceable under law.

Consideration

Something of value (such as money, goods, services, or promised actions) that is exchanged between parties in a contractual agreement.