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

question 74

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

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Definitions:

Id

A term in psychoanalytic theory referring to the part of the unconscious personality which contains our primal, instinctive desires and drives.

Ego

A psychoanalytic term referring to the part of the mind that mediates between the conscious and the unconscious and is responsible for reality testing and a sense of personal identity.

Resistance

In psychology, the opposition to making changes or exploring unconscious feelings and thoughts during therapy.

Anal Stage

The second stage in Freud's psychosexual development theory, focusing on toilet training and control issues, leading to traits of orderliness or messiness.