Assume That a Perfectly Competitive Firm Faces a Fixed Wage

question 368

Multiple Choice

Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should

• A) use relatively more labor.
• B) use relatively less labor.
• C) increase all inputs proportionately.
• D) decrease all inputs proportionately.

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Definitions:

Consciousness

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, and experiences.

Introspection

The examination or observation of one's own mental and emotional processes.

Hypnagogic Perception

Experiences of vivid sensory phenomena that occur during the transition from wakefulness to sleep.

Delta Brain

Pertaining to the delta brain waves, which are the slowest brain waves and are associated with deep sleep and unconscious information processing.