A firm uses labor and capital. To tell if the firm is technologically efficient, you
A) do not need to know the cost of labor or the cost of capital.
B) need to know the cost of capital but not the cost of labor.
C) need to know the cost of labor and the cost of capital.
D) need to know the cost of labor but not the cost of capital.

Question

Quizplus · Accepted Answer

Technological efficiency is about producing the maximum output with given inputs, regardless of their costs. Therefore, knowing the costs of labor or capital is not necessary to determine technological efficiency.

A Firm Uses Labor and Capital