What Is Not True When Thinking of the Firm's Objective

question 16

Multiple Choice

What is not true when thinking of the firm's objective as a cost-minimization problem rather than as a profit-maximization problem?

• A) The slope at any point on any isoquant reveals the marginal rate of technical substitution.
• B) The firm chooses to employ either labor or capital, depending on which factor is cheaper.
• C) The firm chooses a particular level of output to produce.
• D) The price of the output good does not enter the decision of how much labor or capital to employ once the total amount of output to produce has been determined.
• E) The firm will choose labor and capital inputs so that the marginal productivity of labor relative to the marginal productivity of capital equals the price of labor relative to the price of capital.

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Definitions:

Strain Gauges

Sensitive devices used to measure the deformation or strain in an object by electrically tracking how much an object has been stretched or compressed.

Photoplethysmograph

A device used to measure blood volume changes in the microvascular bed of tissue, often used to detect blood oxygen levels.

Axon

A long, slender projection of a nerve cell that typically conducts electrical impulses away from the neuron's cell body.