A producer is hiring 20 units of labor and 6 units of capital (bundle A). The price of labor is $10, the price of capital is $2, and at A, the marginal products of labor and capital are both equal to 20. Beginning at A, if the producer increases labor by one unit and decreases capital by 1 unit, then Multiple Choice cost remains constant and output increases by 20 units. cost remains constant and output decreases by 20 units output remains constant and cost increases by $8. output remains constant and cost decreases by $8. both cost and output remain constant. B

A producer is hiring 20 units of labor and 6 units of capital (bundle A). The price of labor is $10, the price of capital is $2, and at A, the marginal products of labor and capital are both equal to 20. Beginning at A, if the producer increases labor by one unit and decreases capital by 1 unit, then Multiple Choice cost remains constant and output increases by 20 units. cost remains constant and output decreases by 20 units output remains constant and cost increases by $8. output remains constant and cost decreases by $8. both cost and output remain constant. B

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Lesson 8 - Costs Question 3
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am. 118.
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