If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use:
A. more labor and more capital.
B. less labor and less capital.
C. less labor and more capital.
D. less capital and more labor.
Answer: D
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Countries in which the government does not regulate the labor market are likely to have ________ sacrifice ratio
A) an infinite B) a high C) a low D) a negative
Moral hazard may arise in lending when small firms borrow funds from banks for one project (e.g., buy new machinery for a factory) and actually use the funds in other ways (e.g., buy the manager a new corporate jet)
What is the source of the asymmetric information problem in this case? A) The bank has more information about the true cost of the corporate jet than the firm. B) The bank has more information about the opportunity cost of the loaned funds. C) The firm has more information about the actual use of the funds than the bank. D) The firm has more information about the interest rate on the loan than the bank.
If variable cost at each output level doubles,
a. ATC doubles b. AFC doubles c. MC remains unchanged d. MC doubles e. MC less than doubles
Supply-side economics focuses on how fiscal policy might be used to
A. increase consumption. B. increase aggregate supply. C. increase aggregate demand to the full-employment level of real GDP. D. align aggregate demand and aggregate supply.