Multiple Choice
If the cost of capital is $32 per hour, the wage paid to employees is $15 per hour, the marginal product of capital is 16 units per hour, and the marginal product of labor is 7.5 units per hour, to minimize its costs, the firm should _________ .
A) increase the amount of labor and capital used
B) not change the amount of labor or capital
C) increase the amount of labor used and decrease the amount of capital used
D) decrease the amount of labor used and increase the amount of capital used
Correct Answer:
Verified
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