A Firm Is Employing Inputs Such That the Marginal Product

question 322

Multiple Choice

A firm is employing inputs such that the marginal product of labor is 25 and the marginal product of capital is 40. The price of labor is $5, and the price of capital is $8. If the firm wants to minimize costs, then it should

• A)use more labor and less capital.
• B)use less labor and less capital.
• C)use less labor and more capital.
• D)make no change in resource use.

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Definitions:

Incentives

Motivational tools or rewards designed to encourage specific behavior or actions from individuals or groups.

Centre-Of-Gravity Method

A mathematical technique used for finding the best location for a single distribution point that services several stores or areas.

Centralized Facility

describes a single location where operations or decision-making processes are concentrated, often to leverage efficiency or control.

Distribution Centre

A specialized facility that is responsible for receiving, storing, and distributing products to retailers or customers.