201-tutorial-8

201-tutorial-8 - Econ 201 Tutorial #8 Date: Week of Nov....

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Econ 201 Tutorial #8 Date: Week of Nov. 8-14, 2010 Coverage: Chapter 8 Production and Costs I. Multiple Choice Questions: 1. Firm A can produce a unit of output with 10 hours of labour and 5 units of material. Firm B can produce a unit of output with 5 hours of labor and 10 units of material. Firm C can produce a unit of output with 10 hours of labour and 10 units of material. If the prices of labour and material are $10 and $5, respectively, which firm(s) is (are) economically efficient? a. A. b. B. c. C. d. A and B. e. A and C. 2. Suppose a car can be produced using $3,000 worth of capital and $4,000 worth of labour, whereas a radio can be produced using $3 worth of capital and $4 worth of labour. Then the opportunity cost of producing a car is a. 1,000 radios. b. 2,000 radios. c. 4,000 radios. d. $4,000 of labour. e. $3,000 of capital. 3. The ATC curve shifts up if a. Factor prices rise. b. A new and improved technology is introduced. c. Fewer workers are hired. d. All of the above. e. None of the above. 4. Which of the following statements by a restaurant owner refers to the principle of diminishing returns? a. “The higher the quality of the ingredients we use, the higher the cost of producing a meal.” b. “If we double the size of our premises and double everything else – kitchen staff, serving staff, equipment – we can increase the number of meals we serve, but not to double current levels.” c.
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201-tutorial-8 - Econ 201 Tutorial #8 Date: Week of Nov....

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