Suppose That a Firm Is Using 100 Units of Labour

question 103

Multiple Choice

Suppose that a firm is using 100 units of labour and 50 units of capital to produce 200 fax machines per day. The price of labour is $10 per unit and the price of capital is $5 per unit. The MPL equals 2 and the MPK equals 5. In this situation,

• A) the firm should decrease the use of both inputs.
• B) the firm should increase the use of both inputs.
• C) the firm is minimizing its costs.
• D) the firm could lower its production costs by increasing labour input and decreasing capital input.
• E) the firm could lower its production costs by decreasing labour input and increasing capital input.

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Definitions:

Calcium

A chemical element essential for bodily functions, including bone formation, blood coagulation, muscle contraction, and nerve transmission.

Glutamate

A major neurotransmitter in the brain involved in learning, memory, and the regulation of the nervous system.

RNA

Ribonucleic acid, a molecule essential in various biological roles in coding, decoding, regulation, and expression of genes.

Calcium

A chemical element essential for living organisms, primarily in bone formation and metabolic functions.