Two Firms, Wickedly Efficient Widgets (WEW) and Wildly Nepotistic Widgets

question 13

Multiple Choice

Two firms, Wickedly Efficient Widgets (WEW) and Wildly Nepotistic Widgets (WNW) , both produce widgets, using the same production function , where K is the amount of labor used and L is the amount of capital used. Each company can hire labor at $1 per unit of labor and capital at $1 per unit. Each company produces 10 widgets per week. WEW chooses its input combinations to produce in the cheapest way possible. Although it produces the same output per week as WEW, WNW is required by its dotty CEO to use twice as much labor as WEW. How much higher are WNW's total costs per week than WEW's?

• A) $5
• B) $10
• C) $15
• D) $2.50
• E) $2

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Definitions:

Amplitude

In physics, it refers to the maximum extent of a vibration or oscillation, measured from the position of equilibrium.

Subliminal Stimuli

Stimuli that are below the threshold of human perception but can still influence thoughts, feelings, or actions.

Sensory Adaptation

Sensory adaptation is the process by which sensory receptors become less sensitive to constant stimuli, allowing individuals to adapt to their environment.

Subliminal Stimulation

A method to communicate or influence by transmitting messages below the threshold of conscious perception.