A Firm Is Using 50 Units of Labor and 100

question 52

Multiple Choice

A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output.The price of labor is $200 per unit and the price of capital is $100 per unit.At these input levels,another unit of labor adds 400 units to output and another unit of capital adds 600 units to output.The firm

• A)is minimizing the cost of producing 2,000 units of output.
• B)could produce 6 more units of output at the same cost by switching $1 from labor to capital.
• C)could produce 4 more units of output at the same cost by switching $1 from labor to capital.
• D)could keep output constant and reduce cost by using more capital and less labor.
• E)both c and d

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Definitions:

Capitulate

To surrender or give in to the other party's demands in a negotiation, often under pressure or as a last resort.

Stereotypes

Oversimplified and generalized beliefs or expectations about a group of people, based on assumptions about their characteristics.

Dialogue

A conversation or exchange of ideas or opinions between two or more individuals, aimed at reaching a mutual understanding or resolving differences.

Relationship

A connection, association, or involvement between two or more parties, which can be personal, professional, or otherwise.