Bev's Bakery, a Donut Maker, Has Discovered That the Ratio

question 125

Multiple Choice

Bev's Bakery, a donut maker, has discovered that the ratio of the marginal product of labor to the price of labor is 6.5, while the ratio of the marginal product of capital to the price of capital is 6.1.The firm has determined that it does not want to change its total costs.Bev's Bakery should:

• A) do nothing; the differences in the ratios of marginal product to input price are too small to matter.
• B) use more labor and less capital.
• C) use more capital and less labor.
• D) do nothing different since there is insufficient information upon which to make a decision.

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Definitions:

Valued Resources

Resources that are given importance or value by individuals or societies, which can include material goods, services, information, or status.

Collective Actors

Groups or entities that act together with a shared purpose or intention in social or political arenas.

Reality Proposition

A statement or assertion that can be tested and verified to determine its truth in relation to reality or empirical facts.

Aggression-Approval

Describes a situational response wherein acts of aggression are met with approval or consent, often studied in social psychology.