Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. CalculatorsPer HourComputersPer HourSmith10010Jones1206Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour. If they wish to produce 14 computers and 40 calculators per hour efficiently, then Smith should spend ________, and Jones should spend ________.
A. 30 minutes on each; 30 minutes on each
B. 1 hour on computers; 40 minutes on computers and 20 minutes on calculators
C. 1 hour on computers; 20 minutes on computers and 40 minutes on calculators
D. 45 minutes on computers and 15 on calculators; 1 hour on calculators
Answer: B
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At the midpoint of a downward sloping straight-line demand curve, the demand
A) is elastic. B) is unit elastic. C) is inelastic. D) has an elasticity exactly equal to zero.
Market power guarantees profit
A) True, which is why firm's locate as far away from each other as possible. B) False, market power guarantees price greater than marginal cost. C) True, market power guarantees price greater than average cost. D) False, market power guarantees price equal to average cost.