A Firm Is Using 500 Units of Capital and 200

question 18

Multiple Choice

A firm is using 500 units of capital and 200 units of labor to produce 10,000 units of output. Capital costs $100 per unit and labor $20 per unit.The last unit of capital added 50 units of output,while the last unit of labor added 20 units of output.The firm

• A)is using the cost-minimizing combination of capital and labor.
• B)should use more of both inputs in equal proportions.
• C)should use less of both inputs in equal proportions.
• D)could produce the same level of output at a lower cost by using more capital and less labor.
• E)could produce the same output at a lower cost by using less capital and more labor.

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Definitions:

Benzene

An aromatic hydrocarbon with a ring structure of six carbon atoms bonded in a planar hexagon with alternating single and double bonds.

Benzoic Acid

A simple aromatic carboxylic acid with the formula C6H5COOH, commonly used in food preservation, medicine, and organic synthesis.

5-Oxohexanoic Acid

A keto acid with the formula C6H10O3, featuring a ketone functional group (=O) and a carboxylic acid group (-COOH) in its structure.

1-Methylcyclopentan-1-Ol

A cyclic organic compound consisting of a cyclopentane ring with a methyl group and a hydroxyl group attached to the same carbon atom.