A Competitive Firm Produces a Single Output Using Several Inputs

question 1

Multiple Choice

A competitive firm produces a single output using several inputs.The price of output rises by $3 per unit.The price of one of the inputs increases by $6 and the quantity of this input that the firm uses increases by 12 units.The prices of all other inputs stay unchanged.From the weak axiom of profit maximization we can tell that

• A)the output of the good must have increased by at least 24 units.
• B)the inputs of the other factors must have stayed constant.
• C)the output of the good must have decreased by at least 12 units.
• D)the inputs of at least one of the other factors must have decreased by at least 12 units.
• E)the inputs of at least one of the other factors must have increased by at least 12 units.

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Definitions:

Income Increase

A rise in the amount of money received, especially on a regular basis, through work, investments, or other sources.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Supply Analysis

The examination and evaluation of the supply side of the market, focusing on factors such as production capacity, supplier behavior, and costs.

Primary Industry

The sector of the economy that extracts and harvests natural resources directly from the Earth, such as agriculture, mining, and forestry.