Suppose a Firm Is Currently Minimizing Costs in the Long

question 82

Multiple Choice

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by K and L, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

• A) decrease by 50%.
• B) double.
• C) increase by 50%.
• D) increase fivefold.

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Definitions:

Depletion

Depletion refers to the decrease in the quantity or quality of a resource, such as natural resources, leading to diminished value or utility.

Wild Species

Species that occur naturally in the wild and are not domesticated or cultivated.

Poverty

is a socio-economic condition characterized by a severe lack of essential resources, such as food, water, shelter, and education, leading to diminished well-being and quality of life.

Synectics

A problem-solving method that encourages creative thinking, often by making seemingly unrelated analogies.