Refer to the information provided in Table 8.4 below to answer the question(s) that follow.
Table 8.4ProduceUsing TechniquesUnits of Variable KInputs L1 unit of outputA4 4?B2 6????2 units of outputA 7 6?B410????3 units of outputA 8 6?B 6 11Refer to Table 8.4. Assuming the price of capital (K) is $10 per unit and the price of labor (L) is $5 per unit, what production technique should this firm use to produce 2 units of output?
A. production technique A
B. production technique B
C. The firm is indifferent between production technique A and production technique B.
D. It is impossible to determine if the firm should select production technique A or B because total fixed costs are not given.
Answer: B
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The institutions that bring together savers, borrowers, investors, and insurers in a set of interconnected markets where people trade financial products is called the:
A. financial system. B. money system. C. market for interest rates. D. market for loanable funds.
The classical theory of the loanable funds market concluded that
A. Saving and investment would not be equal because of changes in the volume of bank credit. B. An increase in the desire to save would increase the interest rate and lower the volume of investment. C. The interest rate would equate saving and investment and thereby undermine Say's law. D. The interest rate would equate saving and investment and thereby cause Say's law to be valid.
Suppose there are only 2 nations, Atlantis and Pacifica, and only two goods, surfboards and kayaks. If Atlantis produces only surfboards, it can make 50 per day. If Atlantis produces only kayaks, it can make 75 per day. If Pacifica produces only surfboards, it can make 75 per day. If Pacifica produces only kayaks, it can make 75 per day. After trade begins, ________ will specialize in the production of surfboards and ________ will specialize in the production of kayaks.
A. Atlantis; Atlantis B. Pacifica; Pacifica C. Atlantis; Pacifica D. Pacifica; Atlantis
An economic model should capture
A. variables that are not related. B. all possible variables that apply to the problem. C. all information in the world. D. the essential relationships that help to analyze the problem.