If Capital and Labor Are Complementary Inputs and the Firm

question 95

Multiple Choice

If capital and labor are complementary inputs and the firm increases the amount of capital employed in production, the marginal revenue product of labor will

• A) decrease.
• B) increase.
• C) remain constant because the amount of labor was not changed.
• D) either increase, decrease or remain constant depending on how complementary labor and capital are in production.

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Definitions:

Desired Sum

An intended total amount or goal that one aims to achieve through calculation or accumulation.

Single Sum

A financial calculation used to find the future value of a lump sum investment.

Five-Year Period

A span or timeframe that extends for five consecutive years.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows or the rate used by financial institutions for interbank lending and borrowing.