If a Firm Hires One Worker and Eliminates Four Units

question 108

Multiple Choice

If a firm hires one worker and eliminates four units of capital, and hires one more worker and replaces three more units of capital, keeping output constant, then

• A)workers and capital are perfect substitutes.
• B)the firm is operating inefficiently because capital is more efficient than workers.
• C)the firm is experiencing a diminishing marginal rate of technical substitution.
• D)there are decreasing returns to scale.

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Definitions:

Poverty Line

A defined income threshold below which an individual is considered to be living in poverty, based on the minimum level of income deemed necessary to achieve an adequate standard of living.

Hispanics

People residing in the United States who are of Spanish-speaking origin or ancestry, including individuals from Latin American countries.

Poor

Individuals or populations that lack financial resources and basic needs for a comfortable standard of living.

Poverty Rate

The proportion of a population living below the poverty line, reflecting the percentage of people whose income falls below the threshold considered necessary to meet basic needs.