Suppose That Capital Costs $6 Per Unit and Labour Costs

question 41

Multiple Choice

Suppose that capital costs $6 per unit and labour costs $3 per unit. If the marginal product of capital is 12 and the marginal product of labour is 6, the cost- minimizing firm should

• A) employ more capital and less labour.
• B) employ less of both capital and labour.
• C) employ more of both capital and labour.
• D) employ less capital and more labour.
• E) not change its current factor use.

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Definitions:

Strange Situation

A procedure developed in psychology to assess patterns of attachment in young children to their caregivers.

Attachment

The emotional bond that forms between an individual and a caregiver, influencing patterns in relationships and emotional response.

Experimental Method

The only research method that can be used to identify cause–effect relationships between two or more conditions or variables.

Contact Comfort

The psychological and emotional comfort that an infant derives from being in physical contact with its caregiver, crucial for bonding and development.