You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 20, and MPK = 40 the firm:
A. is profit maximizing but not cost minimizing.
B. is cost minimizing.
C. should use less L and more K to cost minimize.
D. should use more L and less K to cost minimize.
Answer: D
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The American Recovery and Reinvestment Act of 2009 was introduced in the hope of:
A. reducing government spending. B. achieving a balanced budget. C. providing healthcare to the uninsured. D. shortening the Great Recession.
The above figure shows the payoff to two firms in an industry deciding to make an investment in worker safety. The Nash equilibrium
A) is for just one of the firms to make the investment. B) is for both firms to make the investment. C) is for neither firm to make the investment. D) does not exist.
To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map. If the U.S
Congress passes an economic stimulus package that pays $300 to each person, how does this affect the budget line for each consumer? A) Makes the budget line steeper B) Makes the budget line flatter C) Parallel outward (rightward) shift D) Parallel inward (leftward) shift E) none of the above
Every transaction concerning the exportation of U.S. goods constitutes a
A) demand for dollars, with no effect on markets for foreign currencies. B) supply of foreign currency, with no effect on the market for dollars. C) supply of foreign currency and demand for dollars. D) demand for foreign currency and a supply of dollars.