Micro2Solutions

Q26 suppose firm a can produce a unit of output with

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Unformatted text preview: t of output with 12 hours of labour and 6 units of material. Firm B can produce a unit of output with 10 hours of labour and 8 units of material. Firm C can produce a unit of out put with 12 hours of labour and 8 units of material. If the prices of labour and material are $15 and $8 a unit respectively, which firm(s) is (are) not technologically efficient? a) b) c) d) e) Firm C Firm A Firm B Firms C and B All firms are technologically efficient. Solution: a) Firm C To produce 1 unit, firm C requires 12 hours of labour and 8 units of material, while firm A requires 12 hours of labour (the same as firm C) and 6 units of material (less than firm C) and Firm B requires 10 hours of labour (less than firm C) and 8 units of material (the same as C). Firm C is not technologically efficient, because it does not produce a given amount of output with least inputs. Page 16 of 33 ©Prep101 www.prep101.com/freestuff Use the following information to answer question 27: Steel Industry Firm Sales A 200 B 180 C 150 D 120 The rest of the industry 350 Coal Industry Firm Sales E 200 F 160 G 140 H 100 I 60 J 40 The rest of the industry 100 Q27. What is the four-firm concentration ratio f...
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This note was uploaded on 08/26/2010 for the course ECON 208 taught by Professor Dickenson during the Fall '07 term at McGill.

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