Figure 11-14 Figure 11-14 Shows the Optimal Input Combinations

question 67

Multiple Choice

Figure 11-14 Figure 11-14 shows the optimal input combinations for the production of a given quantity of cotton in the United States and in China.
-Refer to Figure 11-14. Consider the following statements:
a. For each country, the marginal product per dollar spent on labor equals to the marginal product per dollar spent on capital.
b. The price of labor is relatively higher in the United States than in China and the price of capital is relatively lower in the United States than in China.
c. The price of labor and the price of capital are relatively higher in the United States than in China.
Based on the figure, which of the statements above is true?

• A) All of the statements are true.
• B) statements a and c only
• C) statements a and b only
• D) statements b and c only

---

Definitions:

Cost Drivers

Factors that cause a change in the cost of an activity, such as machine hours, labor hours, or material size.

Vocational School

An educational institution that provides training and skills for specific trades or careers, focusing on practical job-related skills.

Revenue Variances

The difference between actual revenue and budgeted or forecasted revenue, indicating if a business is performing above, on, or below expectations.

Spending Variances

Differences between actual spending and budgeted amounts in a company's budget, indicating over or underspending.