If a Firm Is Using Labour and Capital Such That

question 28

Multiple Choice

If a firm is using labour and capital such that the MP of labour is two times the MP of capital,and the price of labour is four times the price of capital,the firm should ________ in order to minimize its costs of producing its output.

• A)increase capital and decrease labour
• B)decrease both capital and labour
• C)decrease capital and increase labour
• D)increase both labour and capital
• E)not alter its present factor mix

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Definitions:

Partnership

A lawful business structure that involves two or more people co-managing and sharing the earnings.

Professional Corporations

A type of corporate structure specifically designed for licensed professionals, such as doctors, lawyers, and accountants, providing certain tax and legal benefits.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them part owners of the company with certain rights and responsibilities.

Associate Attorneys

Associate attorneys are lawyers who are employed by a law firm or legal office but do not have ownership or partnership status.