Some firms use large amounts of capital and small amounts of labour, while others use small amounts of capital and large amounts of labour to
A)use surpluses of labour and capital and eliminate unemployment of these resources.
B)use the best available technology.
C)use the resources that are most readily available.
D)maximize profit.
E)maximize production.

Question

Quizplus · Accepted Answer

Firms aim to maximize profit, and the choice of using large amounts of capital and small amounts of labor or vice versa depends on which combination results in the highest profits. This decision is based on factors such as the relative prices of capital and labor, the productivity of the two factors, and the cost of using each.

Some Firms Use Large Amounts of Capital and Small Amounts