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If the MPP of the Last Unit of Labor Hired

Question 45

Multiple Choice

If the MPP of the last unit of labor hired equals 6 and the MPP of the last unit of capital hired equals 8, and the price of labor is $4 per unit and the price of capital is $4 per unit, then the firm


A) is minimizing its costs with this combination of factors.
B) is maximizing its profits with this combination of factors.
C) should hire more labor and less capital in order to minimize its costs.
D) should hire more capital and less labor in order to minimize its costs.

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