In the Long Run,a Profit-Maximizing Firm Will Select Capital and Labor

question 53

Multiple Choice

In the long run,a profit-maximizing firm will select capital and labor so that

• A) the marginal product of labor equals the marginal product of capital.
• B) the wage divided by the marginal product of labor equals the rental cost of a unit of capital divided by the marginal product of capital.
• C) labor equals capital.
• D) the wage equals the rental cost of a unit of capital.

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Definitions:

Multidomestic Strategy

A strategy whereby global firms respond to differentiated needs and preferences in each local market in which they operate.

Meganational Strategy

A strategy whereby global firms focus on increasing profitable growth by reaping cost reductions from economies of scale and other advantages of global integration.