A Business Is Employing Inputs Such That the Marginal Product

question 59

Multiple Choice

A business is employing inputs such that the marginal product of labor is 40 and the marginal product of capital is 90. The price of labor is $20, and the price of capital is $30. If the business wants to minimize costs while keeping output constant, then it should

• A) use more labor and less capital.
• B) use less labor and less capital.
• C) use less labor and more capital.
• D) make no change in resource use.

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Definitions:

Finance

The management of large amounts of money, especially by governments or large companies.