If a Firm Uses Only Capital and Labor as Inputs

question 227

Multiple Choice

If a firm uses only capital and labor as inputs, then what should the firm do at a given rate of production if the marginal physical product of labor per last dollar spent is higher than the marginal physical product of capital per last dollar spent?

• A) The firm should increase both the quantity of capital and the quantity of labor.
• B) The firm should decrease both the quantity of capital and the quantity of labor.
• C) The firm should increase the quantity of capital and reduce the quantity of labor.
• D) The firm should decrease the quantity of capital and increase the quantity of labor.

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Definitions:

Protocol Do's

Guidelines or best practices that should be followed within a specific context or situation.

Lunch Time

The period during the day allocated for eating lunch, typically occurring in the midday.

Punctual

The characteristic of being on time or performing an action at the agreed or scheduled time.

Diversity Practices

Actions that can result in increased knowledge, skill, and creativity; better products and services provided to diverse populations; and the ability to recruit excellent talent from the entire labor pool. Such practices include top management’s personal involvement, targeted recruitment, diversity education, network and support groups, and work and family policies that support diversity.