If Labor Costs Twice as Much as Capital (Per Unit)

question 34

Multiple Choice

If labor costs twice as much as capital (per unit) , then, in the long run,

• A) labor will be twice as productive on average as capital.
• B) labor's marginal product will be twice that of capital's.
• C) the firm will hire twice as much labor as capital.
• D) the firm will hire less labor and more capital.

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Definitions:

Clearly Defined

To be specified or described in precise or exact terms.

Mental Set

A psychological tendency to approach situations in a certain way based on previous experiences and perceptions.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used.

Administrative Processes

Procedures and practices involved in running an organization, including planning, organizing, staffing, directing, and controlling.