A firm employs 100 workers at a wage rate of $10 per hour, and 50 units of capital at a rate of $21 per hour. The marginal product of labor is 3, and the marginal product of capital is 5. The firm
A) is producing its current output level at the minimum cost.
B) could reduce the cost of producing its current output level by employing more capital and less labor.
C) could reduce the cost of producing its current output level by employing more labor and less capital.
D) could increase its output at no extra cost by employing more capital and less labor.
E) Both B and D are true.
C
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Microeconomics focuses on ____; macroeconomics concentrates on ____
a. the basic tools of analysis; the use of abstractions and models b. the economies of various countries; the decisions of individual companies c. the decisions of individual units; the behavior of entire economies d. the economic aggregates; the decisions of individual units
According to the doctrine of purchasing-power parity, which of the following should depreciate if over the next year the inflation rate is higher in the U.S. than in the Euro area?
a. both the U.S. real exchange rate and the U.S. nominal exchange rate b. the U.S. real exchange rate, but not the U.S. nominal exchange rate c. the U.S. nominal exchange rate, but not the U.S. real exchange rate d. neither the U.S. nominal exchange rate nor the U.S. real exchange rate