Suppose MP_L = 0

question 62

Multiple Choice

Suppose MP_L = 0.5 ∗ (q/L) and MP_K = 0.5 ∗ (q/K) .In the long run,the firm will hire equal amounts of capital and labor

• A) all of the time.
• B) only when w = r.
• C) only when w = 0.5 ∗ r.
• D) at no point in time.

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Definitions:

Public Choice Theory

A framework for analyzing how public decisions and policies are made, considering individuals as self-interested agents.

Rational Behavior

Decision-making processes that are based on making choices that result in the optimal level of benefit or utility for the individual.

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