Suppose the Marginal Product of Labor Is 10 and the Marginal

question 157

Multiple Choice

Suppose the marginal product of labor is 10 and the marginal product of capital is 8. If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use:

• A) more capital and less labor.
• B) more labor and less capital.
• C) equal amounts of labor and capital.
• D) None of the statements is correct.

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Definitions:

Complementarity

A concept in relationships that suggests a higher degree of satisfaction when partners' characteristics or behaviors complement each other well.

Reciprocity

A social rule where if someone gives you something, you feel an obligation to give something back.

Propinquity

Refers to the physical or psychological proximity between people that often leads to friendship or other relationships.

Just-world Hypothesis

The belief in a fair world where individuals get what they deserve, serving as a way to rationalize inequality and misfortune.