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Suppose the Firm Wants to Manufacture an Additional 500 Units

Question 5

Multiple Choice

Suppose the firm wants to manufacture an additional 500 units of output and can use either capital or labor.Each additional unit of capital costs $50,while each additional worker demands a wage of $10 an hour.Capital will generate 25 units of output,while a worker will generate 2 units of output per hour.What will the firm do?


A) The firm will employ 250 workers.
B) The firm will purchase 20 units of capital.
C) The firm will purchase 30 units of capital.
D) The firm will employ 20 workers.
E) The firm will employ 250 workers and 20 units of capital.

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