Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should
A) use relatively more labor.
B) use relatively less labor.
C) increase all inputs proportionately.
D) decrease all inputs proportionately.
Answer: A
Economics
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A) increases. B) decreases. C) does not change. D) initially increases then decreases.
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How does an increase in income affect the market of bus rides (inferior good)?
a. The demand curve for bus rides to shift to the right b. The demand curve for bus rides to shift to the left c. The supply curve for bus rides to shift to the right d. The supply curve for bus rides to shift to the left
Economics