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

question 9

Multiple Choice

Two firms, Wickedly Efficient Widgets (WEW) and Wildly Nepotistic Widgets (WNW) , both produce widgets with the same production function y = K^1/2L^1/2, where K is the input of capital and L is the input of labor.Each company can hire labor at $1 per unit and capital at $1 per unit.WEW produces 10 widgets per week, choosing its input combination so as to produce these 10 widgets in the cheapest way possible.WNW also produces 10 widgets per week, but its dotty CEO requires it to use twice as much labor as WEW uses.Given that it must use twice as many laborers as WEW does and must produce the same output, how much larger are WNW's total costs than WEW's?

• A)$10 per week
• B)$20 per week
• C)$15 per week
• D)$5 per week
• E)$2 per week

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Definitions:

Agreeableness

One of the five major personality traits, indicating an individual's propensity towards cooperation, compassion, and social harmony.

Nature

The inherent features, phenomena, or ecological systems of the physical world, excluding humans and human creations.

Attitudes

A predisposition or a tendency to respond positively or negatively towards a certain idea, object, person, or situation.

Modes of Thinking

Modes of thinking refer to the various cognitive processes and strategies an individual uses to process information, solve problems, and make decisions.