Consider a Firm That Uses Only Labour and Capital

question 86

Multiple Choice

Consider a firm that uses only labour and capital. At the present use of labour and capital, the MP of labour is two times the MP of capital, and the price of labour is two times the price of capital. In order to minimize its costs, the firm should

• A) not alter its present factor mix.
• B) decrease capital and increase labour.
• C) increase both labour and capital.
• D) decrease both capital and labour.
• E) substitute capital for labour until their marginal products are equal.

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Definitions:

Hematocrit determination

A laboratory test that measures the proportion of red blood cells in blood volume to assess an individual's blood composition.

Red blood cells

Specialized cells in the body responsible for carrying oxygen from the lungs to the rest of the body and returning carbon dioxide to be exhaled.

Centrifuge

A device used to spin a specimen at high speed until it separates into its component parts.

Hemoglobin determination

A laboratory test used to measure the amount of hemoglobin in the blood, which is crucial for diagnosing and managing various medical conditions.