Assume a firm is currently employing 20 units of capital and 100 units of labor in its production process
Assume also that the marginal product of the 20th unit of capital is 40 units of output, the marginal product of the 100th unit of labor is 10 units of output and the per unit prices of capital and labor are $20 and $10, respectively. In this case, in order to minimize its costs of production the firm should: A) hire more capital and less labor.
B) hire more labor and less capital.
C) hire less capital and less labor.
D) hire more capital and more labor.
A
You might also like to view...
Which of the following is an example of a forward linkage?
a. A government spending program reduces the nation's level of unemployment. b. A compact disc industry creates a demand for CD players. c. The development of a shoe industry creates a demand for a leather industry. d. An increase in the population increases the demand for food. e. New educational facilities improve the literacy rate of the population.
Calculate the total change in aggregate demand because of an initial $300 decrease in investment spending, given that C = 150 + 0.50YD.
A. $300 decrease. B. $150 decrease. C. $600 decrease. D. $1,200 decrease.