If Capital Is Fixed, but a Firm Varies Labor

question 22

Multiple Choice

If capital is fixed, but a firm varies labor

• A)the firm stays on the same isoquant.
• B)the firm moves to a new isoquant.
• C)the firm might move to a new isoquant, depending on how much labor is added.
• D)the firm's output will be dependent on the marginal rate of technical substitution.

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Definitions:

Constant

A situation or state of affairs that does not change.

Investment Model

Theory that uses three factors—satisfaction, alternatives, and investments—to explain why people stay with their long-term relationship partners.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future decisions but often do.

Alternatives

Different options or choices available in any given situation or decision-making process.