If the Marginal Physical Product (MPP) of the Last Dollar

question 179

Multiple Choice

If the marginal physical product (MPP) of the last dollar spent on labor is only half as large as the MPP from the last dollar spent on capital, this firm should

• A) increase its use of labor and employ less capital.
• B) employ more capital.
• C) increase its use of both labor and capital.
• D) maintain its current factor utilization pattern.