A Firm Is Using 500 Units of Labor and 100

question 96

Multiple Choice

A firm is using 500 units of labor and 100 units of capital to produce 100 units of output. Labor costs $5 per unit and capital $20 per unit. At these input levels, another unit of labor adds 5 units of output, while another unit of capital adds 40 units of output. If the firm uses 496 units of labor and 101 units of capital instead, what will happen?

• A) Cost will be unchanged, and output will increase by 20 units.
• B) Cost will be unchanged, and output will increase by 35 units.
• C) Output will be unchanged, and cost will decrease by $20.
• D) Output will be unchanged, and cost will decrease by $40.

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Definitions:

Positive Experiences

Events or moments that lead to feelings of happiness, satisfaction, or well-being.

Performance Goals

Goals framed in terms of performing well in front of others, being judged favorably, and avoiding criticism.

Intrinsic Pleasure

A feeling of satisfaction or joy that comes from within, not dependent on external factors.

Attachment Style

Patterns of attachment behavior that are established in early childhood and affect relationships throughout one's life, including secure, anxious, and avoidant attachment styles.