1. Is the following statement true or false? If a firm has two plants for producing output using only labor and plant B is more productive than plant A, a manager who wants to get the most output from a fixed amount of labor should always assign more labor to plant B. If you think this is true say why. If you think it is false, give an example to prove your point.
True because assigning more workers to the plants in maximizing the amount produced from any given labor.
2. Consider the preferred prices of the author and the publisher of an electronic book, whose marginal cost of production is close to zero. Would the two disagree about the price to be charged for the book?
The author forgoes creating the alternate material in favor of creating the book. At the time of distributing the electronic book, the publishers experience essentially no marginal cost.