If a firm uses only capital and labor as inputs, then what should the firm do at a given rate of production if the marginal product of labor per last dollar spent is higher than the marginal product of capital per last dollar spent?
A. The firm should decrease both the quantity of capital and the quantity of labor.
B. The firm should increase both the quantity of capital and the quantity of labor.
C. The firm should decrease the quantity of capital and increase the quantity of labor.
D. The firm should increase the quantity of capital and reduce the quantity of labor.
Answer: C
You might also like to view...
Suppose the economy's production function is Y = AK0.3N0.7. Suppose K = 200, N = 2000, and A = 1. Calculate the marginal product of capital
A) 1.0 B) 1.5 C) 2.0 D) 2.5
Money market instruments are ________ term and ________ relative to capital market instruments
A) long; risky B) short; risky C) short; less risky D) long; less risky
A Japanese television sells for ¥100,000 and a dollar is equal to ¥100. What is the dollar price of the television?
A) $1000 B) $99,900 C) $10,000,000 D) $100,100
Corporations have a separation and control problem because
A) owners and managers frequently have different incentives. B) most of the profits are reinvested. C) the shareholders control the firm. D) taxes are paid only by the board of directors.