Refer to the following:
The price of capital is $500 per unit.
-At point A, the firm can exchange
A) 1 unit of capital for 5 units of labor and keep output unchanged.
B) 5 units of capital for 1 unit of labor and keep output unchanged.
C) 5 units of capital for 1 unit of labor and keep cost unchanged.
D) both b and c
E) none of the above

Question

Refer to the following:
  The price of capital is $500 per unit.
-At point A, the firm can exchange
A) 1 unit of capital for 5 units of labor and keep output unchanged. 
B) 5 units of capital for 1 unit of labor and keep output unchanged. 
C) 5 units of capital for 1 unit of labor and keep cost unchanged. 
D) both b and c 
E) none of the above

Quizplus · Accepted Answer

At point A, the firm can exchange 1 unit of capital for 5 units of labor and keep output unchanged, indicating a trade-off in the production process while maintaining the same level of output.

Refer to the Following