Use the firm's long-run cost-minimizing decision rule to explain the differences in the relative use of capital and labor in agriculture in the United States and the Peoples Republic of China
What will be an ideal response?
The rule for cost minimization states that inputs should be employed such that the ratio of marginal physical product to input price is equal across all of the inputs used in the production process. As the price of labor rises relative to the price of capital, this causes the firm to substitute capital for labor. In the United States, labor for agriculture is scarce relative to the amount of available capital. In China, just the reverse is true. Hence, the cost of labor relative to the cost of capital is much higher in the United States than in China. This situation leads agriculture to be more capital intensive in the United States and more labor intensive in China.
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The larger the four-firm concentration ratio, the ________ competition within an industry; the larger the Herfindahl-Hirschman Index, the ________ competition within an industry
A) more; more B) more; less C) less; more D) less; less E) The premise of the question is wrong because the four-firm concentration ratio applies only to markets with four firms in it and these markets are, by definition, not competitive.
Explain which of the following items are not capital goods:
What will be an ideal response?
An example of technological development is to increase output through
a. raising pay. b. working longer hours. c. hiring more workers. d. using better machines.
Inefficient allocation of resources occurs when
A. no one can be made better off without having someone else give up something. B. it is possible to make some people better off without making others worse off. C. society is operating at a point high on the production possibilities frontier. D. society is operating at a point low on the production possibilities frontier.