If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should
a. reduce the labor used and increase the machinery used if labor costs half as much as machinery.
b. reduce the labor used and increase the machinery used if labor and machinery cost the same amount.
c. reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery.
d. reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.
c
You might also like to view...
Spending programs that substantially alter the composition of aggregate demand will tend to
a. decrease the rate of unemployment. b. increase the rate of unemployment. c. promote a more rapid recovery. d. reduce structural unemployment.
Expansionary fiscal policy during a recession is most effective when it
a. creates jobs, even if they are on unproductive projects. b. directs the economy to full employment and resources into productive projects. c. substantially changes the composition of aggregate demand. d. provides members of Congress with large political contributions.