Consider a Firm That Uses Only Labour and Capital

question 102

Multiple Choice

Consider a firm that uses only labour and capital. At the present use of labour and capital, the MP of labour is twice the MP of capital, and the price of labour is four times the price of capital. In order to minimize its costs, the firm should

• A) increase capital and decrease labour.
• B) maintain its present factor mix.
• C) decrease both capital and labour.
• D) decrease capital and increase labour.
• E) increase both labour and capital.

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Definitions:

Social Richness

The concept that different forms of communication, including face-to-face and digital mediums, vary in their ability to convey meaningful social cues and emotional information.

Moral Law

A set of universal principles governing ethics and behavior, often believed to be inherent or divinely inspired, guiding the distinction between right and wrong.

Authority

Legitimate power. But note: although many people seem to think that an appeal to authority will settle a philosophical dispute, in most philosophical disputes, it is the nature of authority itself that is in question.

Physically Strong

Having significant physical power, muscle strength, and stamina to perform tasks that require physical effort.