A Cost- Minimizing Firm Will Increase Its Use of Labour

question 35

Multiple Choice

A cost- minimizing firm will increase its use of labour and decrease its use of capital when the

• A)marginal product of capital,per dollar spent on capital,is less than the marginal product of labour,per dollar spent on labour.
• B)average product of capital is higher than the average product of labour.
• C)marginal product of capital is higher than the marginal product of labour.
• D)marginal product of capital,per dollar spent on capital,is greater than the marginal product of labour,per dollar spent on labour.
• E)total product of capital is higher than the total product of labour.

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Definitions:

Senior Managers

Individuals at the highest level of organizational management who are responsible for the strategic direction and success of the company.

Predetermined Price

A price set in advance for a transaction, contract, or agreement, often used in budgeting and forecasting.

Pay Survey

A research tool used to collect and analyze compensation data from multiple organizations to determine market trends, establish pay standards, and ensure competitive salary packages.

External Equity

An aspect of compensation management that ensures employees' pay is competitive with the rates offered by other organizations in the same industry for similar positions.