Refer to the information provided in Table 8.4 below to answer the question(s) that follow.
Table 8.4
$$\begin{array} { c c c c }
\hline \text { Produce } & \text { Using Techniques } & \text { Units of Variable K } & \text { Inputs L } \
\hline 1 \text { unit of output } & \text { A } & 4 & 4 \
\hline & \text { B } & 2 & 6 \
\hline 2 \text { units of output } & & & \
\hline & \text { A } & 7 & 6 \
\hline& \text { B } & 4 & 10 \
\hline 3 \text { units of output } &\text { A } &8 & 6 \
\hline &\text { B } & 6& 11 \
\hline
\end{array}$$
-Refer to Table 8.4. Assuming the price of capital (K) is $10 per unit and the price of labor (L) is $5 per unit, the firm will use production technique ________ to produce ________ of output.
A) A; all three units
B) B; all three units
C) B; the first two units of output and production technique A to produce the third unit
D) A; the first unit and production technique B to produce the second and third units

Question

Refer to the information provided in Table 8.4 below to answer the question(s) that follow.
Table 8.4
 $$\begin{array} { c c c c } 
\hline \text { Produce } & \text { Using Techniques } & \text { Units of Variable K } & \text { Inputs L } \
\hline 1 \text { unit of output } & \text { A } & 4 & 4 \
\hline & \text { B } & 2 & 6 \
\hline 2 \text { units of output } & & & \
\hline & \text { A } & 7 & 6 \
\hline& \text { B } & 4 & 10 \
\hline 3 \text { units of output } &\text { A }  &8 & 6 \
\hline &\text { B } & 6& 11 \
\hline
\end{array}$$
-Refer to Table 8.4. Assuming the price of capital (K) is $10 per unit and the price of labor (L) is $5 per unit, the firm will use production technique ________ to produce ________ of output.
A) A; all three units
B) B; all three units
C) B; the first two units of output and production technique A to produce the third unit
D) A; the first unit and production technique B to produce the second and third units

Quizplus · Accepted Answer

To determine the most cost-effective production technique for each level of output, we calculate the total cost of inputs (capital K and labor L) for each technique at each output level, using the given prices ($10 per unit of K and $5 per unit of L). For 1 unit of output, Technique B ($2K*10 + 6L*5 = $50) is cheaper than Technique A ($4K*10 + 4L*5 = $60). For 2 units of output, Technique B ($4K*10 + 10L*5 = $90) is cheaper than Technique A ($7K*10 + 6L*5 = $100). However, for 3 units of output, Technique A ($8K*10 + 6L*5 = $110) becomes cheaper than Technique B ($6K*10 + 11L*5 = $115). Therefore, the firm will use Technique B for the first two units of output and Technique A for the third unit.

Refer to the Information Provided in Table 8 -Refer to Table 8