If a Firm Is Using Labour and Capital Such That

question 63

Multiple Choice

If a firm is using labour and capital such that the MP of labour is two times the MP of capital, and the price of labour is four times the price of capital, the firm should in order to minimize its costs of producing its output.

• A) decrease both capital and labour
• B) decrease capital and increase labour
• C) not alter its present factor mix
• D) increase both labour and capital
• E) increase capital and decrease labour

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