At Its Current Level of Production and Input Employment, a Firm's

question 72

Multiple Choice

At its current level of production and input employment, a firm's marginal products of labor and capital are 5 units of output. The market wage is $10 per unit of labor and the price per unit of capital is $25. The firm could increase its profits by

• A) hiring more labor and less capital.
• B) hiring more capital and less labor.
• C) hire less capital and less labor.
• D) making no changes since it is already employing the profit maximizing combination of inputs.

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Definitions:

Debit Memorandum

A document or entry recorded to reflect an adjustment or correction, usually increasing the amount a buyer owes to a seller.

Credit Memorandum

A document issued by a seller to a buyer, reducing the amount that the buyer owes under the terms of an earlier invoice.

Petty Cash

A small amount of cash kept on hand used for paying minor or incidental expenses in a business setting.

Postage Expense

The cost incurred by a business for sending mail.