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Consider the Model for the Derivation of Demand for Labour

Question 17

Multiple Choice

Consider the model for the derivation of demand for labour in a long-run context. At equilibrium, which of the following statements is false?


A) The slope of the isoquant is equal to the slope of the isocost line.
B) A profit-maximizing firm will choose the cheapest capital-labour combination that yields the optimal output.
C) If labour is twice as expensive per unit than capital, then the marginal product of labour is twice as large as the marginal product of capital.
D) If the firm were to alter its input combination by hiring more or less of a factor, its profits would fall.
E) At the optimal level of output, labour is cheaper than capital.

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