Some children in Siliguri, India, work as low-wage professional rock breakers. The rocks they break with a hammer are used in buildings and roads. In terms of the idea of efficiency, having children break rocks with hammers:
A. is not efficient because modern equipment could crush stone with far less effort.
B. could be efficient given the extremely low price of labor and high price of capital.
C. is technically efficient but not economically efficient because the job does not pay a living wage.
D. is economically efficient but not technically efficient because it uses too much labor relative to capital.
Answer: B
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A country that can produce a good using fewer resources than another country has a(n):
a. lower opportunity cost of producing the good than another country. b. absolute advantage. c. specialization in the production of the good. d. all of these.
Which of the following factors affect a country's net foreign investment?
a. real interest rates paid on foreign assets b. real interest rates paid on domestic assets c. government policies that affect foreign ownership of domestic assets d. all of the above e. none of the above
Figure 11.3Figure 11.3 shows demands and costs for a monopolistically competitive firm. When the firm's demand curve shifts from D1 to D2 and to D3, in the long run we would expect:
A. the firm to earn a zero economic profit. B. the firm to charge a price equal to its marginal cost. C. the firm to increase its output level. D. the firm to produce at the lowest average cost.
If an excess quantity of labor demanded exists in a free market, there is a tendency for
A) quantity supplied to rise. B) the wage rate to fall. C) quantity demanded to fall. D) the wage rate to rise.