By expressing the cost-minimizing condition as MPK/MPL = PK/PL,we are able to see
A) how the firm determines its profit-maximizing output.
B) how the firm can adjust the marginal products of the factors of production to the prices of the factors given by the market.
C) that the capital-labour ratio is fixed.
D) that the ratio of factor prices is constant over time.
E) that the firm is producing at a lower cost if the left-hand side of the equation is greater than the right-hand side.
Correct Answer:
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Q1: Suppose a firm is using 1500 units
Q3: Suppose a firm is using 100 units
Q4: A cost-minimizing firm will increase its use
Q5: Suppose a firm is using 1500 units
Q6: TABLE 8-1 Q7: Consider a firm that uses only labour Q8: The principle of substitution plays a central Q9: Which of the following conditions indicate cost Q10: A profit-maximizing firm will increase its use Q11: TABLE 8-1
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