Bev's Bakery, a Donut Maker, Has Discovered That the Ratio

question 125

Multiple Choice

Bev's Bakery, a donut maker, has discovered that the ratio of the marginal product of labor to the price of labor is 6.5, while the ratio of the marginal product of capital to the price of capital is 6.1.The firm has determined that it does not want to change its total costs.Bev's Bakery should:

• A) do nothing; the differences in the ratios of marginal product to input price are too small to matter.
• B) use more labor and less capital.
• C) use more capital and less labor.
• D) do nothing different since there is insufficient information upon which to make a decision.

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Definitions:

Thick Skin

A type of skin that contains five layers and is found in areas of high abrasion, such as palms of the hands and soles of the feet, characterized by a thicker epidermis.

Keratinocyte

The predominant cell type in the outer layer of the skin, responsible for the production of keratin.

Epidermis

The outermost layer of skin, serving as a barrier against environmental damage and pathogens.

Sweat Gland

A gland that produces sweat, found in the skin of mammals, which helps in thermoregulation and excretion.