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:

Funeral Expenses

Costs associated with the burial or cremation and memorial services of a deceased person.