Suppose a Firm Is Using 1500 Units of Labour and 20

question 22

Multiple Choice

Suppose a firm is using 1500 units of labour and 20 units of capital to produce 100 tonnes of mineral ore.The price of labour is $40 per unit and the price of capital is $1000 per unit.The MPL equals 24 and the MPK equals 600.In this situation,

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

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Definitions:

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal, utilized in inventory valuation and accounts receivable.

Internal Controls

Systems and procedures implemented by a company to ensure integrity of financial and accounting information, promote accountability, and prevent fraud.

Inventory Tickets

Documentation that tracks the quantity and description of inventory items in stock.

Physical Count

The process of counting the actual inventory on hand at a given time, typically used for verifying the accuracy of inventory records.