Consider a Firm That Uses Only Labour and Capital

question 123

Multiple Choice

Consider a firm that uses only labour and capital.At the present use of labour and capital,the MP of labour is twice the MP of capital,and the price of labour is four times the price of capital.In order to minimize its costs,the firm should

• A)maintain its present factor mix.
• B)decrease capital and increase labour.
• C)increase capital and decrease labour.
• D)increase both labour and capital.
• E)decrease both capital and labour.

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