A Profit-Maximizing Firm Will Increase Its Use of Capital and Decrease

question 107

Multiple Choice

A profit-maximizing firm will increase its use of capital and decrease its use of labour when the

• A)marginal product of capital is higher than the marginal product of labour.
• B)marginal product of capital,per dollar spent on capital,is greater than the marginal product of labour,per dollar spent on labour.
• C)average product of capital is higher than the average product of labour.
• D)total product of capital is higher than the total product of labour.
• E)marginal product of capital,per dollar spent on capital,is less than the marginal product of labour,per dollar spent on labour.

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