The marginal cost curve crosses
A. only the average variable cost curve at its bottom.
B. both the average cost curve and the average variable cost curve at their bottoms.
C. only the average cost curve at its bottom.
D. the marginal product curve at its maximum.
If the marginal rate of technical substitution of labor for capital (MRTSLK) exceeds the relative price of labor in terms of capital (PL/PK), then
A. the firm's long-run average cost curve is rising.
B. the firm is producing its output at the least possible cost, but the firm should reduce its output level to increase its profits.
C. the firm has increased its output level beyond the point of diminishing marginal returns.
D. the firm needs to use less capital and more labor to reach its expansion path.
A firm is currently producing 200 units of output using 60 hours of labor and 80 hours of capital. The marginal product of labor is 12 units of output per hour, and the marginal product of capital is 15 units of output per hour. If the wage rate is $6 per hour and the rental rate is $3 per hour, then
A. the firm's use of labor and capital is cost-efficient.
B. the firm should use more labor and less capital.
C. the firm should use more capital and less labor.
D. we cannot determine if the firm's use of inputs is efficient without more information.