Question

If a firm pays labor $5 and receives a MPL of 10, while paying capital $100 and receiving a MPC of 100, to lower production costs it should hire more labor and less capital.

a. True
b. False

Answer 1

True

Step-by-step explanation:

Here, we want to evaluate the validity of the given statement whether true or false.

The correct answer is true.

For a firm that pays $5 labor and receives a MPL of 10, while paying capital of $100, and receiving a MPC of 100, to lower production costs, it should higher more labor and less capital.