See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?
Saturn Rings
Machines
30
0
20
5
10
8
0
10
What will be an ideal response?
Production exhibits increasing cost. The first five machines require a sacrifice of 10 rings. An additional 10-ring sacrifice gains only three machines, and the next 10-ring loss allows just a two-machine gain. For maximum growth in production, one would allocate all resources toward the purchase of machines, since capital spending increases future production. Clearly, one would need to sacrifice all current production, settling for no mood rings today, to have many more rings in the future.
You might also like to view...
Which of the following is true of a first-price sealed-bid auction?
A) Bidders directly compete with each other. B) Bidders place their bids simultaneously. C) Bidders know each other's bids. D) Bidders always bid below their willingness to pay.
Which of the following defines monopoly?
A) Sherman Act B) Clayton Act C) Federal Trade Commission Act D) none of the above
Which of the following practices is restricted by the antitrust laws of the United States?
a. Merger of smaller firms into a large firm b. Entry of new firms in the long run c. Standardization of products in a market d. Exit of non-performing firms in the long run e. Quality differentiation by competitive firms
What determines eligibility for SNAP?
a. If a person does not earn enough money to buy their desired amount of food b. If a person has young children or if the person is considered a senior c. If 30% of a person’s income does not afford a nutritionally adequate diet d. If 30% of a person’s income does not afford a person’s desired quality and quantity of food