If the MPP of the Last Unit of Labor Hired

question 45

Multiple Choice

If the MPP of the last unit of labor hired equals 6 and the MPP of the last unit of capital hired equals 8, and the price of labor is $4 per unit and the price of capital is $4 per unit, then the firm

• A)is minimizing its costs with this combination of factors.
• B)is maximizing its profits with this combination of factors.
• C)should hire more labor and less capital in order to minimize its costs.
• D)should hire more capital and less labor in order to minimize its costs.

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Definitions:

Downstream Costs

Expenses incurred after the manufacturing process, including distribution, marketing, and customer service.

Production Costs

The total expenses incurred in the process of producing goods or services, including raw materials, labor, and overhead.

Professional Services

Expert services provided by qualified professionals such as lawyers, accountants, and consultants.

Service Shops

Businesses that provide professional or technical services rather than products, often requiring specialized labor or skills.