Multiple Choice
Suppose in a particular production process that capital and labor are perfect substitutes so that three units of labor are equivalent to one unit of capital. If the price of capital is $4 per unit and the price of labor is $1 per unit, the firm should:
A) employ capital only.
B) employ labor only.
C) use three times as much capital as labor.
D) use three times as much labor as capital.
Correct Answer:
Verified
Correct Answer:
Verified
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