"If the wage rate paid to one form of labor is twice the cost of another form of labor, the first type of labor must be twice as productive." Comment
What will be an ideal response?
This is true. Firms minimize cost by setting the ratio of marginal productivity per unit cost equally across all inputs. If one form of labor is twice as expensive as another, the firm will want the MP of the first type of labor to be twice that of the second.
You might also like to view...
An increase in bond prices will most likely result in
A) a decrease in the quantity demanded of money. B) an increase in the quantity demanded of money. C) an increase in the opportunity cost of holding money. D) an increase in interest rates.
When a 5% increase in price leads to an 8% increase in quantity supplied, supply is relatively inelastic
a. True b. False Indicate whether the statement is true or false
Since the 1970s, the velocity of money has
a. behaved in a predictable fashion. b. behaved in an erratic fashion. c. decreased in value. d. increased in a stable and predictable fashion.
If there is allocative efficiency in a purely competitive market for a product, the minimum price producers are willing to accept is:
A. greater than marginal cost. B. less than marginal benefit. C. equal to the maximum price consumers are willing to pay. D. equal to the amount of efficiency or deadweight losses.