Suppose a Firm Employs Two Kinds of Inputs,capital at $100

question 73

Multiple Choice

Suppose a firm employs two kinds of inputs,capital at $100 per unit,and labour at $25 per unit.If the marginal product of capital is 50,then the firm should ________ in order to minimize its production costs.

• A)employ more capital and less labour
• B)employ more labour and less capital
• C)employ more labour and more capital
• D)not change its current factor use
• E)There is insufficient information to make a recommendation.

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Definitions:

Price Elasticity

A measure of how much the demand for a product changes in response to a change in its price.

Demand

The total quantity of a product or service that consumers are willing and able to purchase at a given price.

Assessments of Value

The process of evaluating or estimating the worth, significance, or effectiveness of an item, service, or process.

Pricing Objectives

Objectives that guide how a company sets the prices of its products or services to achieve specific business goals.