If labor costs twice as much as capital (per unit), then, in the long run,

Question

Quizplus · Accepted Answer

When labor costs twice as much as capital per unit, the firm will try to minimize costs by using the factors of production more efficiently. This will lead to labor-intensive techniques of production, where more labor and less capital is used. This will result in the marginal product of labor being higher than capital. Hence, the correct option is B.

If Labor Costs Twice as Much as Capital (Per Unit)