Multiple Choice
Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:
A) increase both labor and capital proportionally to meet the cost minimization condition.
B) decrease both labor and capital proportionally to meet the cost minimization condition.
C) increase labor and reduce capital to meet the cost minimization condition.
D) increase capital and reduce labor to meet the cost minimization condition.
Correct Answer:
Verified
Correct Answer:
Verified
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