A Business Is Employing Inputs Such That the Marginal Product

question 19

Multiple Choice

A business is employing inputs such that the marginal product of labor is 40 and the marginal product of capital is 90. The price of labor is $20, and the price of capital is $30. If the business wants to minimize costs while keeping output constant, 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:

Intangible Product

A product, service, or offering that cannot be physically touched or seen, but can be purchased and used, such as digital goods or services.

Just-In-Time (JIT) Shipments

A logistics strategy where materials and products are delivered exactly when needed for production or sale, minimizing inventory levels and storage costs.

Moving Assembly Line

An innovation in manufacturing where products are assembled as they move along a conveyor belt, significantly improving efficiency.

Transformation Process

The conversion of inputs into outputs, thus transforming raw materials, labor, and information into products or services.