If a Firm Is Using a Lot of Capital and Just

question 11

Multiple Choice

If a firm is using a lot of capital and just a little labor, the marginal product of labor is_____ relative to the marginal product of capital making it _____ to substitute labor for capital.

• A) low; more difficult
• B) high; easier
• C) high; more difficult
• D) low; easier

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Definitions:

Minimum Resale Prices

Agreements or policies that set the lowest price at which a product may be resold, often used by manufacturers to maintain brand image or stabilize market price.

Vertical Agreements

Contracts between companies at different levels of the supply chain, such as between a manufacturer and a retailer.

Sherman Act

An antitrust law enacted in 1890 to combat monopolies and cartels, promoting fair competition for the benefit of consumers.

DOJ

The Department of Justice, a federal executive department of the U.S. government responsible for the enforcement of the law and administration of justice.