Suppose That Capital Costs $10 Per Unit and Labour Costs

question 23

Multiple Choice

Suppose that capital costs $10 per unit and labour costs $4 per unit.If the marginal product of capital is 50 and the marginal product of labour is 50,the firm should in order to minimize its costs of producing its output.

• A)employ more capital and less labour
• B)not change its current factor use
• C)employ less capital and labour
• D)employ less capital and more labour
• E)employ more capital and labour

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Definitions:

Excess Reserves

The surplus of reserves held by banks over and above the regulatory requirements, often indicating caution or a lack of lending opportunities.

Easy Money Policy

A monetary policy strategy aimed at increasing the money supply to stimulate economic growth by lowering interest rates.

American Imports

Goods and services brought into the United States from other countries for sale.

International Value

The worth of a goods, services, or financial instruments in the international market.