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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Definitions:

Congressman

A member of the United States Congress, which is the legislative body of the country, including both the Senate and the House of Representatives.

Stem Cell

A cell with the unique ability to develop into specialized cell types in the body; used in medical research with the potential to treat various diseases.

Explanandum

The phenomenon or event that is to be explained in scientific and philosophical inquiries.

Hypothesis

A supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.