Consider a Hypothetical Economy in Which Only Computers and Shoes

question 118

Multiple Choice

Consider a hypothetical economy in which only computers and shoes are produced and in which computer production is capital intensive and shoe production is labor intensive. If two resources are being used, labor and capital, then the capital-labor ratio would be:

• A) higher in the shoe industry.
• B) lower in the computer industry.
• C) the same in both industries.
• D) higher in the computer industry.

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Definitions:

Average Fixed Costs

The fixed costs of production divided by the quantity of output produced, depicting the spread of fixed expenses over units produced.

Total Variable Costs

The sum of all costs that vary with output level, including materials, labor, and other expenses that increase as production increases.

Drones

Unmanned aerial vehicles (UAVs) operated by remote control or onboard computers, utilized for various purposes including surveillance, delivery, and recreation.

ATC

The total production cost divided by the amount of goods produced is known as Average Total Cost.