Assume That a Perfectly Competitive Firm Faces a Fixed Wage

question 119

Multiple Choice

Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should

• A) use relatively more capital.
• B) use relatively less capital.
• C) increase all inputs proportionately.
• D) decrease all inputs proportionately.

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Definitions:

Define The Problem

The initial step in problem-solving that involves clearly identifying and stating the issue at hand to facilitate effective resolution strategies.

Suggesting Options

Offering or presenting various choices or alternatives for consideration in decision-making processes.

Maintenance-Related Behavior

Refers to actions aimed at preserving or improving the current state or condition of something, often in the context of machinery, systems, or relationships.

Blocking

In communication, blocking refers to actions or strategies that interrupt or prevent dialogue or the exchange of ideas.