Suppose a Firm Uses Labor and Capital to Produce Output

question 116

Multiple Choice

Suppose a firm uses labor and capital to produce output.The last unit of labor hired has a marginal product of 12 units of output, and the last unit of capital employed has a marginal product of 20 units.Use the optimal combination of inputs rule to calculate the price of capital if the price of labor is $6 per unit.The price of capital is

• A)$2.
• B)$10.
• C)$20.
• D)impossible to determine with the information given.

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Definitions:

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position compared to its competitors.

Sustainable Innovation

The creation of new products, processes, or technologies that meet current needs without compromising the ability of future generations to meet their own needs.

Use of Plastic

The utilization of synthetic or semi-synthetic organic compounds that are malleable and can be molded into solid objects for various uses.

Islam

A monotheistic Abrahamic religion founded in the 7th century in Arabia by Prophet Muhammad, emphasizing belief in one God (Allah), and following the Quran as its holy scripture.