Suppose a Firm Finds That an Additional Dollar Spent on Labor

question 98

Multiple Choice

Suppose a firm finds that an additional dollar spent on labor increases output more than does an additional dollar spent on machines. Under these conditions, the firm:

• A) is technically efficient.
• B) is economically efficient.
• C) should substitute labor for machines if it wants to increase economic efficiency.
• D) should substitute machines for labor if it wants to increase economic efficiency.

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Definitions:

Agency

An organization or unit within a government responsible for implementing policies and providing specific services.

Electoral Politics

The activities associated with the election of officials to government positions, including campaigns and voting.

Social Reform

Efforts aimed at making significant modifications to societal structures in order to address injustices and improve the collective well-being.

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A policy that has been fully implemented and executed, turning theoretical plans into actual programs and actions.