If the marginal product of labor is 45 units of output and the marginal product of capital is 56 units of output while the wage rate is $20 per worker and the cost of capital is $28 per machine, are these two inputs being used in the least-cost
combination and what should be done if they are not?
The marginal product per dollar spent on labor is 2.25 units and the marginal product per dollar spent on capital is 2 units. Therefore, the firm is not using the least-cost combination of inputs. To reduce costs the firm should use more labor and less capital.
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Between 1994 and 2004, the monthly charge for cellular phone service decreased from $120 per month to $30 per month. At the same time, the number of subscribers increased from less than 10 million to more than 75 million. Which of the following provides the best explanation for these changes?
a. an increase in consumer income between 1994 and 2004 b. a reduction in the price of residential phone service, a substitute for cellular phone service c. an increase in the wages of workers in the cellular phone industry d. technological improvements that reduced the cost of supplying cellular phone service
Which of the following nations has a total fertility rate that would suggest that its next generation will only be half the size of the current generation?
A. Hong Kong. B. Australia. C. Sweden. D. All of these nations.