When a Cost-Minimizing Firm Is Faced with an Increase in the Relative

question 34

Multiple Choice

When a cost-minimizing firm is faced with an increase in the relative price of labour,it adjusts its factor usage so as to

• A)increase the marginal product of capital relative to the marginal product of labour.
• B)increase the marginal product of labour relative to the marginal product of capital.
• C)use more labour per unit of output than before.
• D)use more of both capital and labour per unit of output.
• E)maintain the previous usage of labour.

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