Suppose a Firm Uses Labor and Capital to Produce Output

question 116

Multiple Choice

Suppose a firm uses labor and capital to produce output.The last unit of labor hired has a marginal product of 12 units of output, and the last unit of capital employed has a marginal product of 20 units.Use the optimal combination of inputs rule to calculate the price of capital if the price of labor is $6 per unit.The price of capital is

• A)$2.
• B)$10.
• C)$20.
• D)impossible to determine with the information given.

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Definitions:

Mirror Image

A principle in contract law that requires the terms of the acceptance to exactly match the terms of the offer.

Quasi-Contract Theory

A legal concept where a court imposes a contractual obligation on a party who has not actually entered into a contract, to prevent unjust enrichment.

Family Relationships

Connections between individuals related by blood, marriage, or adoption, affecting legal rights and responsibilities.

Illegal

Refers to actions or activities that are forbidden by law and subject to criminal penalties and sanctions.