If the Product Derived from the Last Dollar Spent on Labor

question 46

Multiple Choice

If the product derived from the last dollar spent on labor is greater than the product derived from the last dollar spent on capital, then the firm

• A) is minimizing costs.
• B) should use more labor and less capital to minimize costs.
• C) should use less labor and more capital to minimize costs.
• D) should increase the price paid to labor and decrease the price paid to capital to minimize costs.

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Definitions:

Downward Sloping

Describes a curve or line that moves from an upper left to a lower right direction, typically used in the context of supply and demand curves.

Value of Money

The purchasing power of money, which can be influenced by factors like inflation and interest rates.

Money Demand

The total amount of money that households and businesses wish to hold in the form of cash or deposits, at a given time.

Quantity of Money

The total amount of money available in an economy, including currency and balances held in checking and savings accounts.