Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Originally the firm produced 2,

Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Originally the firm produced 2,000 units of output by combining its fixed capital with 200 units of labor and 500 units of raw materials. Now the firm improves its production process so that it can produce 3,000 units of output by combining its fixed capital with 100 units of labor and 500 units of raw materials. What happened to total cost?

Product XProduct YQuantityMUxQuantityMUy11611221421031238410465854

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $2, and the price of good Y is $1. The budget of the consumer is $10. If the consumer can only buy old product X, how much will the consumer buy and what will be the total utility from spending the given budget?

Multiple Choice

Which of the following is a true statement?

Multiple Choice

• Innovation normally follows invention and precedes diffusion.
• Invention normally follows diffusion and precedes innovation.
• Diffusion normally follows invention and precedes innovation.
• Innovation normally follows diffusion and precedes invention.

Technological advance is a three-step process involving

Multiple Choice

• invention, duplication, and diffusion.
• duplication, innovation, and diversity.
• invention, innovation, and diffusion.
• necessity, invention, and solution.

Consumers will make a decision to purchase a new product only if it

Multiple Choice

• has a lower marginal utility per dollar spent than another product.
• is recommended as a valuable product by other consumers.
• increases the total utility they obtain from their limited income.
• can be sold at a lower price than that for a competing product.