If the Marginal Physical Product of More Labor Is Twice

question 124

Multiple Choice

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

• A) reduce the labor used and increase the machinery used if labor costs half as much as machinery.
• B) reduce the labor used and increase the machinery used if labor and machinery cost the same amount.
• C) reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery.
• D) reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.

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Increase Competition

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