In the following diagram you are given two technologies, A and B, which can produce 100 metres of cloth. Technology A uses 1 worker and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes of coal. The diagram also depicts three examples of isocosts, NM, GF and JH. The wage cost and the price of coal are denoted by w and p. respectively. Which of the following statements is correct?
In the following diagram you are given two technologies, A and B, which can produce 100 metres of cloth. Technology A uses 1 worker and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes of coal. The diagram also depicts three examples of isocosts, NM, GF and JH. The wage cost and the price of coal are denoted by w and p. respectively. Which of the following statements is correct?
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter12: The Supply Of And Demand For Productive Resources
Section: Chapter Questions
Problem 9CQ
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![In the following diagram you are given two technologies, A and B,
which can produce 100 metres of cloth. Technology A uses 1 worker
and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes
of coal. The diagram also depicts three examples of isocosts, NM, GF
and JH. The wage cost and the price of coal are denoted by w and p.
respectively. Which of the following statements is correct?
Tonnes of coal
10
9
00
D
S
M
4
Number of workers
3
When w- $20 and p- $10, the cost of using technology A is $60.
Isocost JH corresponds to the case where the w- $20 and p = $10.
The cost of using technology B is the same for both isocost JH and isocost GF.
Isocost NM is the only one of the three isocosts depicted which corresponds to the case where w- $20 and p = $10.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F23042f94-5ca4-418b-9e66-0ee77e904fcb%2F02ddefc6-1c4d-4c47-87c8-5d1eb5e77635%2Fjxu2mk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:In the following diagram you are given two technologies, A and B,
which can produce 100 metres of cloth. Technology A uses 1 worker
and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes
of coal. The diagram also depicts three examples of isocosts, NM, GF
and JH. The wage cost and the price of coal are denoted by w and p.
respectively. Which of the following statements is correct?
Tonnes of coal
10
9
00
D
S
M
4
Number of workers
3
When w- $20 and p- $10, the cost of using technology A is $60.
Isocost JH corresponds to the case where the w- $20 and p = $10.
The cost of using technology B is the same for both isocost JH and isocost GF.
Isocost NM is the only one of the three isocosts depicted which corresponds to the case where w- $20 and p = $10.
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