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:

Supply Chain

The entire system of producing and delivering a product or service, from the initial sourcing of materials to the final delivery to consumers.

Customer Orders

Requests made by customers to purchase specific products or services from a business, often requiring processing and fulfillment.

Financial Resources

Assets or capital available to an individual or organization for spending or investing.

Specialized Mode

A specific way of operation or function that is designed for a particular purpose or task, often seen in technology or transportation sectors.