Suppose a Firm Is Using 100 Units of Labour and 50

question 43

Multiple Choice

Suppose a firm is using 100 units of labour and 50 units of capital to produce 200 completed client tax returns per day.The price of labour is $5 per unit and the price of capital is $2 per unit.The MP_L equals 5 and the MP_K equals 2.In this situation,the firm

• A)is minimizing its costs.
• B)should increase the use of both inputs.
• C)could lower its production costs by decreasing labour input and increasing capital input.
• D)could lower its production costs by increasing labour input and decreasing capital input.
• E)should decrease the use of both inputs.

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Definitions:

Reorder Point

Reorder Point is the inventory level at which new stock should be ordered to avoid running out, determined by usage rates and delivery times.

Cards

Small, typically rectangular pieces of plastic or thick paper that contain information and can be used for various purposes, including transactions, identification, or gaming.

Serial Number

A unique identifier assigned sequentially or randomly to an item for identification and inventory tracking purposes.

Equipment Manual

A comprehensive guide provided by the manufacturer that contains specifics on operating, maintaining, and troubleshooting equipment.