To minimize costs, a firm should use more capital and less labor if the product derived from the last dollar spent on labor is ________ the product derived from the last dollar spent on capital.

A) less than
B) greater than
C) equal to
D) either greater than or less than

Question

Mary Elaine Lois Perales · Accepted Answer

Final Answer : A, Explanation :  The principle of minimizing costs involves equating the marginal products per dollar spent on all inputs. If the marginal product per dollar spent on labor is less than that for capital, the firm can reduce costs by substituting capital for labor until the marginal products per dollar are equalized.

To minimize costs, a firm should use more capital and less labor if the product derived from the last dollar spent on labor is ________ the product derived from the last dollar spent on capital.

A) less than
B) greater than
C) equal to
D) either greater than or less than

Definitions

Learning Objectives

Learning Objectives

Related questions

To minimize costs, a firm should use more capital and less labor if the product derived from the last dollar spent on labor is ________ the product derived from the last dollar spent on capital.A) less thanB) greater thanC) equal toD) either greater than or less than

Definitions

Learning Objectives

Learning Objectives

Related questions

To minimize costs, a firm should use more capital and less labor if the product derived from the last dollar spent on labor is ________ the product derived from the last dollar spent on capital.

A) less than
B) greater than
C) equal to
D) either greater than or less than