A Firm Employs 100 Workers at a Wage Rate of $10

question 177

Multiple Choice

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.

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Definitions:

Power Distance

The extent to which less powerful members of organizations and institutions accept and expect power to be distributed unequally.

Inequality

Refers to an uneven distribution of resources, opportunities, and rights among individuals or groups, leading to disparities in wealth, health, and social status.

Character Theories

Theories related to the study of personality that focus on the moral and ethical qualities of individuals.

Natural Liberty

The concept of freedom from artificial or man-made restrictions, promoting the idea of living in accordance with natural laws.