If the product derived from the last dollar spent on labor is greater than the product derived from the last dollar spent on capital, then the firm
A. should use more labor and less capital to minimize costs.
B. is minimizing costs.
C. should use less labor and more capital to minimize costs.
D. should increase the price paid to labor and decrease the price paid to capital to minimize costs.
Answer: A
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Refer to the figure above. The consumer surplus before the tax is imposed is given by the area ________
A) BCJ B) BAH C) CAE D) JBHF
If the local pizzeria raises the price of a medium pizza from $6 to $10 and quantity demanded falls from 700 pizzas a night to 100 pizzas a night, the arc price elasticity of demand for pizzas is:
A) 0.67. B) 1.5. C) 2.0. D) 3.0.
As bonds become a riskier asset, the demand for money ________ and, all else constant, the equilibrium interest rate ________
A) rises; rises B) rises; falls C) falls; rises D) falls; falls
Refer to the above figure. Ajax and Greenco are oligopolists. Above you are given the payoff matrix for the two firms giving the payoff associated with different pricing strategies. What is the best strategy for Greenco if Ajax decides on charging a low price?
A. high price B. low price C. There is no best strategy. D. Not enough information is given to determine the best strategy.