A Competitive Firm Produces a Single Output Using Several Inputs

question 24

Multiple Choice

A competitive firm produces a single output using several inputs.The price of output rises by $4 per unit.The price of one of the inputs increases by $4 and the quantity of this input that the firm uses increases by 16 units.The prices of all other inputs stay unchanged.From the weak axiom of profit maximization we can tell that

• A)the inputs of the other factors must have stayed constant.
• B)the inputs of at least one of the other factors must have decreased by at least 16 units.
• C)the output of the good must have increased by at least 16 units.
• D)the output of the good must have decreased by at least 8 units.
• E)the inputs of at least one of the other factors must have increased by at least 16 units.

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Definitions:

Preferred Stock Dividends

Payments made to holders of preferred stock, often at a fixed rate, which are prioritized over dividends to common stockholders.

Inventory Turnover Rate

A metric that measures how quickly a company sells its inventory within a given period, calculated by dividing cost of goods sold by average inventory.

Office Furniture

Items used in an office setting for the purpose of work, including desks, chairs, filing cabinets, and bookshelves.

Marketable Securities

Liquid financial instruments that can be quickly converted into cash at a reasonable price, such as stocks and bonds.