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Usimov [2.4K]
3 years ago
9

A​ firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one unit of labor but does n

ot want its output quantity to​ change, the firm should A. add 1.25 units of capital. B. use 1.25 fewer units of capital. C. use 0.8 fewer units of capital. D. use 5 fewer units of capital.
Business
1 answer:
marissa [1.9K]3 years ago
7 0

Answer: C. use 0.8 fewer units of capital.

Explanation:

The Marginal Rate of Technical Substitution (MRTS) shows how much you can decrease capital or labor by in order to keep production constant if you increase either capital or labor.

It is calculated by the formula:

= Marginal product of labor  / Marginal product of capital

= 4 / 5

= 0.8

<em>The firm should use 0.8 fewer units of capital in order to maintain the same production level. </em>

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8 0
1 year ago
Why does the law of increasing opportunity cost occur?
Elena L [17]

Answer:

The correct answer is A and B

Explanation:

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The law of opportunity cost occur when some of the resources are best suited for some tasks or products instead of others and it will lead to increase in production with increase in the opportunity cost too.

8 0
3 years ago
A change in depreciation method is accounted for:Select one:a. Retrospectively.b. Prospectively, like changes in accounting esti
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Answer: :a. Retrospectively

Explanation:

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This means that it must be accounted for by going back to all periods where the change affects an entry and adjusting that entry for the change so that the accounting can be more accurate.

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