Which of the Following Identifies the Optimal Usage of Inputs

question 29

Multiple Choice

Which of the following identifies the optimal usage of inputs by a profit-maximizing firm?

• A) Marginal product of labor = marginal product of capital = 0
• B) Marginal product of labor/price of labor = marginal product of capital/price of capital
• C) Marginal revenue product of labor = marginal revenue product of capital
• D) Marginal cost of labor = marginal cost of capital
• E) Marginal product of labor/marginal product of capital = price of capital/price of labor

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Definitions:

Income Mobility

The ability of individuals or families to move up or down the economic ladder within a society over time.

Economic Status

An individual's or area's financial condition and stability, often measured by income, employment, and wealth indicators.

Annual Income

The total amount of money earned by an individual or business in one year from all sources.

Work Effort

The amount of physical or mental energy used to perform a task or achieve an objective.