A Firm Is Using 50 Units of Labor and 100

question 79

Multiple Choice

A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output. The price of labor is $200 per unit and the price of capital is $100 per unit. At these input levels, another unit of labor adds 400 units to output and another unit of capital adds 600 units to output. The firm

• A) is minimizing the cost of producing 2,000 units of output.
• B) could produce 6 more units of output at the same cost by switching $1 from labor to capital.
• C) could produce 4 more units of output at the same cost by switching $1 from labor to capital.
• D) could keep output constant and reduce cost by using more capital and less labor.
• E) both c and d

---

Definitions:

Specific Brand

A particular brand that is identified by its unique name, symbol, or design, used to distinguish it from other brands within the same category.

Deodorant

A personal care product applied to the body to prevent or mask odor caused by the bacterial breakdown of perspiration.

Competitor-Oriented Pricing

A pricing strategy where a company sets its prices based on competitors' prices rather than solely on its own costs or consumer demand.

Bakery

A place where bread, cakes, cookies, and other baked goods are made or sold.