When a Cost- Minimizing Firm Is Faced with an Increase

question 104

Multiple Choice

When a cost- minimizing firm is faced with an increase in the relative price of labour, it adjusts its factor usage so as to

• A) increase the marginal product of capital relative to the marginal product of labour.
• B) use more of both capital and labour per unit of output.
• C) increase the marginal product of labour relative to the marginal product of capital.
• D) use more labour per unit of output than before.
• E) maintain the previous usage of labour.

---

Definitions:

=MAPE Function

Stands for Mean Absolute Percentage Error, a statistical measure used to assess the accuracy of forecasting models.

Mean Absolute Percent Error

A measure of prediction accuracy in statistics, representing the average of the absolute percentages of errors between predicted and observed values.

Strategic And Planning Decisions

High-level decisions that shape the overall direction and objectives of an organization, involving long-term planning and allocation of resources.

Production Forecasts

Predictions about the quantity of products a company needs to produce in future periods based on expected demand.