When There Are Many Inputs, a Firm Should Employ Them

question 75

Multiple Choice

When there are many inputs, a firm should employ them so that only inputs:

• A)whose marginal product per dollar are identical are hired.
• B)with the lowest marginal cost are hired.
• C)with the highest marginal product are hired.
• D)whose marginal cost is less than their marginal product are hired.

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Definitions:

Average Rate of Return

It calculates the return, generated over a period of time, of an investment compared to the initial investment.

Net Present Value Method

A method in capital budgeting that evaluates an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Present Value

The estimated current value of a forthcoming sum of money or series of cash inflows, considering a certain rate of return.

Method

A systematic way or approach used to accomplish a task or solve a problem, often applied in research, analysis, or strategic planning.