Suppose a Firm Is Using 100 Units of Labour and 50

question 10

Multiple Choice

Suppose a firm is using 100 units of labour and 50 units of capital to produce 200 completed client tax returns per day.The price of labour is $5 per unit and the price of capital is $2 per unit.The MPL equals 5 and the MPK equals 2.In this situation,the firm

• A)is minimizing its costs.
• B)should increase the use of both inputs.
• C)could lower its production costs by decreasing labour input and increasing capital input.
• D)could lower its production costs by increasing labour input and decreasing capital input.
• E)should decrease the use of both inputs.

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Definitions:

Roughness Average

A measure of the average deviations of a surface from its geometric ideal form, indicating the surface texture.

Roughness Grade

A classification system for the surface texture of objects, typically measured by the average machined surface roughness.

Microinches

A unit of length used in engineering and machining that equals one millionth of an inch, often used to specify surface finish.

Micrometers

Precision measuring instruments used to measure very small dimensions with high accuracy.