Consider the Model for the Derivation of Demand for Labour

question 3

Multiple Choice

Consider the model for the derivation of demand for labour in a long-run context. At equilibrium, which of the following statements is false?

• A) The slope of the isoquant is equal to the slope of the isocost line.
• B) A profit-maximizing firm will choose the cheapest capital-labour combination that yields the optimal output.
• C) If labour is twice as expensive per unit than capital, then the marginal product of labour is twice as large as the marginal product of capital.
• D) If the firm were to alter its input combination by hiring more or less of a factor, its profits would fall.
• E) At the optimal level of output, labour is cheaper than capital.

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Definitions:

Board of Directors

A group of individuals elected to represent shareholders and oversee the management and operations of an organization, making strategic decisions.

Vroom's model

A theoretical model that suggests decision-making and leadership styles should be adapted based on the situation and characteristics of the followers.

Decision Making

The method of selection by recognizing a decision, assembling data, and examining various alternatives.

Goal Clarity

The extent to which the objectives or desired outcomes of a task or project are clearly defined and understood.