Suppose a Firm Is Currently Minimizing Costs in the Long

question 25

Multiple Choice

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by ½(K/L) ^1/2 and ½(L/K) ^1/2, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

• A) decrease by 50%.
• B) double.
• C) increase by 50%.
• D) increase fivefold.

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Definitions:

Lawrence Kohlberg

A psychologist best known for his theory of stages of moral development, which describes how individuals evolve in their understanding of morality.

Liberty Rights

The right to be left alone to pursue our legitimate interests.

Legitimate Interests

Interests that do not violate others’ similar and equal interests.

Ethical Subjectivist

One who believes that morality is nothing more than personal opinion or feelings.