A profit- maximizing firm will increase its use of capital and decrease its use of labour when the
A) marginal product of capital is higher than the marginal product of labour.
B) average product of capital is higher than the average product of labour.
C) marginal product of capital,per dollar spent on capital,is greater than the marginal product of labour,per dollar spent on labour.
D) marginal product of capital,per dollar spent on capital,is less than the marginal product of labour,per dollar spent on labour.
E) total product of capital is higher than the total product of labour.
Correct Answer:
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Q6: TABLE 8-1 Q24: Suppose that capital costs $50 per unit Q102: Isocost lines are downward sloping straight lines,reflecting Q103: When a cost- minimizing firm is faced Q104: The point of tangency between the short- Q105: Consider a firm that uses only labour Q106: Consider the long- run average cost curve Q108: The figure below shows the isocost Q110: For many firms the LRAC curve is Q112: What is the definition of productivity?
A)decreasing
A)the efficient
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