If the Marginal Physical Product of More Labor Is Twice

question 124

Multiple Choice

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

• A) reduce the labor used and increase the machinery used if labor costs half as much as machinery.
• B) reduce the labor used and increase the machinery used if labor and machinery cost the same amount.
• C) reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery.
• D) reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.

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Definitions:

Obligations

A duty or requirement to perform or refrain from performing some action.

Just Cause

A legal term referring to a valid or legally sufficient reason for certain actions, like termination of employment.

Lost A Major Contract

A significant business setback occurring when a crucial contract is terminated or not renewed, affecting future operations and profits.

Fired

Terminated from employment, often due to performance issues or workplace violations.