Consider a Firm That Uses Only Labour and Capital

question 51

Multiple Choice

Consider a firm that uses only labour and capital.At the present use of labour and capital,the MP of labour is two times the MP of capital,and the price of labour is two times the price of capital.In order to minimize its costs,the firm should

• A)substitute capital for labour until their marginal products are equal.
• 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:

Cyclothymia

A mood disorder characterized by periods of mild depression and periods of hypomania, which are less severe than those in bipolar disorder.

Pleasurable

Describing an experience or sensation that is enjoyable and brings happiness or satisfaction.

Unipolar

Referring to mood disorders that involve only one emotional pole, such as depression, without episodes of mania.

Dissociative Identity Disorder

A severe form of dissociation, a mental process which produces a lack of connection in a person's thoughts, memory, and sense of identity, formerly known as multiple personality disorder.