EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 20, Problem 4DQ
To determine
The efficient allocation of the resources.
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The figure below shows the market for large bags of potato chips. Market for Potato Chips in large bag units Price ($) 7 LO LO 5 3 2 1 0 10 20 30 40 50 60 70 80 90 100110120 S D
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- Suppose there exist two imaginary countries, Yosemite and Sequoia. Their labor forces are each capable of supplying four million hours per day that can be used to produce pistachios, chinos, or some combination of the two. The following table shows the amount of pistachios or chinos that can be produced by one hour of labor. Country Yosemite Sequoia Pistachios (Pounds per hour of labor) 8 LO 5 Chinos (Pairs per hour of labor) 16 20arrow_forward. Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople’s productivity. Currently, each salesperson sells an average of one car per day while being paid $20 per hour for an eight-hour day. LO17.8 What is the current labor cost per car sold? Suppose that when the dealer raises the price of labor to $30 per hour the average number of cars sold by a salesperson increases to two per day. What is now the labor cost per car sold? By how much is it higher or lower than it was before? Has the efficiency of labor expenditures by the firm (cars sold per dollar of wages paid to salespeople) increased or decreased? Suppose that if the wage is raised a second time to $40 per hour the number of cars sold rises to an average of 2.5 per day. What is now the labor cost per car sold? If the firm’s goal is to maximize the efficiency of its labor expenditures, which of the three hourly salary rates should it use: $20 per hour, $30 per hour, or $40 per hour?…arrow_forward12 Mk Mc Graw Hill Connect 5. Refer to the following production possibilities table for con. sumer goods (automobiles) and capital goods (forklifts): LO1.6 a. Show these data graphically. Upon what specific assump- tions is this production possibilities curve based? b. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increas- ing opportunity costs: its shape or its length? c. If the economy characterized by this production possibilities table and curve is producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? d. Is production at a point outside the production possibilities curve currently possible? Could a future advance in technol- ogy allow production beyond the current production possi- bilities curve? Could international trade allow a country to consume beyond its current production possibilities curve?!…arrow_forward
- Production Techniques: II I III IV Labor 4 2. Capi tal 3 5 1 Answer the next two questions on the basis of the following information: Suppose 30 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $3 and $4 respectively. Which technique is economically most efficient in producing A? O 1) I. 2) I. 3) |I. O 4) IV.arrow_forwardSuppose that you own a 10 acre plot of land that you would like to rent out to wheat farmers. For them, bringing in a harvest involves $30 per acre for seed, $80 per acre for fertilizer, and $70 per care for equipment rentals and labor. With these inputs, the land will yield 40 bushels of wheat per acre. Now suppose the price at which wheat cab be sold is $7 per bushel and that farmers want to earn a normal profit of $10 per acre. What is the most that any farmer would pay to rent your 10 acres? What if the price of wheat rose to $8 per bushel?arrow_forwardWith current technology, suppose a fifirm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the fifirm can sell these 400 loaves at $2 per unit, will it continue to produce banana bread? If this fifirm’s situation is typical for the other makers of banana bread, will resources flow to or away from this bakery good?arrow_forward
- With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also, assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, will it continue to produce banana bread? If this firm’s situation is typical for the other makers of banana bread, will resources flow to or away from this bakery good?arrow_forward1) A manufacturer of breakfast cereals has the opportunity to purchase barley at $3.00 a bushel for 10,000 bushels, if it also buys 5,000 bushels of wheat at $16.00 per bushel. However, the manufacturer does not use any barley in its products, and currently needs 20,000 bushels of wheat. If the current market price of barley is $3.80 per bushel and that of wheat is $15.80 per bushel, should this opportunity be taken, and why? A) Because the company has no need of barley, the opportunity should not be taken. B) Because the opportunity does not meet the company's need for wheat, the opportunity should not be taken. C) Because the value of the opportunity is positive, the opportunity should be taken. D) Because the value of the opportunity is negative, the opportunity should not be taken.arrow_forwardFoster, Inc. makes a new type of rubber gloves for assembly-line workers and will sell them to companies that manufacture electronics products. Foster’s costs for producing a pair of these new rubber gloves is $4.15. Electronics manufacturers pay $6.25 per pair for the currently available rubber gloves for their assembly-line workers. Because Foster’s new rubber gloves allow a better grip, they will enable the workers at the electronics manufacturing companies to assemble 2 percent more products per hour than if they wear the currently available gloves. Assume that each pair of workers’ gloves lasts for 40 hours, and the average pay rate for these workers is $20 per hour. The Foster company would like to estimate the value of a pair of these new rubber gloves to the electronics-manufacturer customer. For R.S. Foster, what is the price floor for a pair of these new rubber gloves? What is the price ceiling? If Foster uses a penetration strategy to price a pair of these new…arrow_forward
- Foster, Inc. makes a new type of rubber gloves for assembly-line workers and will sell them to companies that manufacture electronics products. Foster’s costs for producing a pair of these new rubber gloves is $4.15. Electronics manufacturers pay $6.25 per pair for the currently available rubber gloves for their assembly-line workers. Because Foster’s new rubber gloves allow a better grip, they will enable the workers at the electronics manufacturing companies to assemble 2 percent more products per hour than if they wear the currently available gloves. Assume that each pair of workers’ gloves lasts for 40 hours, and the average pay rate for these workers is $20 per hour. The Foster company would like to estimate the value of a pair of these new rubber gloves to the electronics-manufacturer customer. What is the reference value of a pair of Foster’s new rubber gloves? Calculate the differentiation value(s) of a pair of Foster’s new rubber gloves. Calculate the electronics…arrow_forwardWith current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, what is its total revenue? Its total cost? Its profit or loss? Will it continue to produce banana bread? If this firm’s situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?arrow_forwardBased on Figure 1, choose the right statement. Assume that cloth is the labor- intensive commodity and that corn is the capital-intensive commodity. 1) The qutput of cloth less than doubled because of lack of enough demand. O 2) The output of cloth less than doubled because capital is not used in the cloth production. O 3) The output of cloth less than doubled because labor is the only factor of production. .O 4) The output of cloth less than doubled because only labor increased. Figure 1. Economic growth Com (Tons) 80 70 BA 130 250 Cloth (Yards)arrow_forward
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