Heavenly Delights, an Ice Cream Maker, Has Discovered That the Ratio

question 172

Multiple Choice

Heavenly Delights, an ice cream maker, has discovered that the ratio of the marginal product of labor to the price of labor is 4.5, while the ratio of the marginal product of capital to the price of capital is 6.9.The firm has determined that it does not want to change its total costs.Heavenly Delights should:

• A) do nothing; the differences in the ratios of marginal product to input price are too small to matter.
• B) use more labor and less capital.
• C) use more capital and less labor.
• D) give up ice cream production and produce broccoli instead.

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Definitions:

Place Theory

A theory in the field of psychophysics that suggests the perception of sound depends on where each component frequency produces vibrations along the basilar membrane of the inner ear.

Frequency Theory

A theory related to hearing that suggests the brain detects the frequency of an auditory signal by the rate at which the auditory nerve fires.

Taste Sensations

The experience or perception of taste, typically categorized into basic tastes such as sweet, sour, salty, bitter, and umami.

Salt

A mineral composed primarily of sodium chloride (NaCl), used in cooking and preserving food, and is essential for human health in small amounts.