Firm a Can Produce a Unit of Output with 10

question 44

Multiple Choice

Firm A can produce a unit of output with 10 hours of labour and 5 units of capital. Firm B can produce a unit of output with 5 hours of labour and 10 units of capital. Firm C can produce a unit of output with 10 hours of labour and 10 units of capital. If the prices of labour and material are $10 and $5, respectively which firm is technologically efficient?

• A)A only
• B)B only
• C)C only
• D)A and B
• E)A and C

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Definitions:

Efficiency Standard

A benchmark for measuring the optimal use of resources in the production of goods or the delivery of services.

100% Efficiency

A theoretical situation where all resources are utilized to their maximum capacity without any waste, often used as a benchmark or target in productivity and operations management.

Variances

Differences between planned figures and actual performance or results, often analyzed in budgets and standard costing.

Production Costs

The total cost incurred by a company to manufacture a product or offer a service, including raw materials, labor, and overhead expenses.