A firm is operating such that the marginal product of labor is 48 and the marginal product of capital is 12. The firm is minimizing its costs only if
A. the rental rate is one fourth the wage.
B. since capital is more productive than labor, the firm must be minimizing cost.
C. the wage is one fourth the rental rate.
D. Given this information the firm can't be minimizing cost under any circumstances.
Answer: A
You might also like to view...
Unlike the person or persons who formally form a sole proprietorship or partnership, a corporation has
(a) a perpetual life. (b) unlimited liability for the debts accumulated by the firm. (c) the right to vote. (d) concentrated ownership.
Research indicates that the more independent the central bank,
A) the smaller the budget deficit. B) the higher the nominal interest rate. C) the lower the rate of inflation. D) the larger the time inconsistency problem in making policy. E) the greater the likelihood of a "war of attrition" over policy.