If the price of labor increases,in order to minimize the costs of producing a given level of output,the firm manager should use:
A) less of labor and more of capital.
B) less of labor and less of capital.
C) more of labor and more of capital.
D) more of labor and less of capital.

Question

Quizplus · Accepted Answer

When the price of labor increases, it becomes more expensive to hire workers. To minimize costs, the firm manager should use less labor and more capital. This means investing in more technology, equipment, and machinery to replace some of the labor that would have been used before. This allows the firm to produce the same level of output with fewer workers, reducing labor costs and offsetting the increased cost of labor.

If the Price of Labor Increases,in Order to Minimize the Costs