A firm is currently hiring capital and labor so that MPL/PL < MPK/PK. If the firm wishes to maximize profits it should hire
A. more capital and more labor.
B. more labor and less capital.
C. less labor and more capital.
D. less labor and less capital.
Answer: C
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Refer to Scenario 2. The marginal cost of the sixth unit of output is:
A) $1.33. B) $7.50. C) $8.00. D) $45.00.
If on a given product indifference curve a firm is using an insufficient (nonoptimal) amount of one of its inputs
a. output will be below optimal. b. the MRP of the input will be below its price. c. costs will not be minimal. d. relative input prices need to change.
The satisfaction received from using one more unit of a good or service is called
a. opportunity cost b. opportunity benefit c. marginal cost d. marginal benefit.