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Production and Costs Cost-Minimizing Input Combination Sample Questions

Production and Costs Cost-Minimizing Input Combination Sample Questions. AP Economics Mr. Bordelon. Assume a firm employs two inputs, A and B. The optimal hiring of inputs occurs when which of the following is true? TP A /P A = TP B /P B MP A /P A = MP B /P B TC A = TC B MP A = MP B

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Production and Costs Cost-Minimizing Input Combination Sample Questions

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  1. Production and CostsCost-Minimizing Input CombinationSample Questions AP Economics Mr. Bordelon

  2. Assume a firm employs two inputs, A and B. The optimal hiring of inputs occurs when which of the following is true? • TPA/PA = TPB/PB • MPA/PA = MPB/PB • TCA = TCB • MPA = MPB • (MPA)(PA) = (MPB)(PB)

  3. Assume a firm employs two inputs, A and B. The optimal hiring of inputs occurs when which of the following is true? • TPA/PA = TPB/PB • MPA/PA = MPB/PB • TCA = TCB • MPA = MPB • (MPA)(PA) = (MPB)(PB)

  4. Max employs both labor and capital to produce his trinkets. Currently the last unit of labor employed has a marginal product of 100 units. The last unit of capital employed has a marginal product of 40 units. The price of labor is $25 per unit and the price of capital is $10 per unit. Max should: • increase the hiring of both labor and capital. • increase the hiring of labor and decrease the hiring of capital. • decrease the hiring of labor and increase the hiring of capital. • do nothing; he is hiring the optimal quantity of labor and capital. • decrease the hiring of both labor and capital.

  5. Max employs both labor and capital to produce his trinkets. Currently the last unit of labor employed has a marginal product of 100 units. The last unit of capital employed has a marginal product of 40 units. The price of labor is $25 per unit and the price of capital is $10 per unit. Max should: • increase the hiring of both labor and capital. • increase the hiring of labor and decrease the hiring of capital. • decrease the hiring of labor and increase the hiring of capital. • do nothing; he is hiring the optimal quantity of labor and capital. • decrease the hiring of both labor and capital.

  6. A firm is hiring labor and capital in the cost-minimizing combination. Which of the following would cause the firm to increase hiring of both labor and capital? • Demand for the product being produced increases by 5%. • The price of capital and labor both increase by 5%. • The productivity of labor increases by 5%. • The price of capital increases by 5%. • The price of labor increases by 5%.

  7. A firm is hiring labor and capital in the cost-minimizing combination. Which of the following would cause the firm to increase hiring of both labor and capital? • Demand for the product being produced increases by 5%. • The price of capital and labor both increase by 5%. • The productivity of labor increases by 5%. • The price of capital increases by 5%. • The price of labor increases by 5%.

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