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Suppose in a particular production process that capital and labor are perfect substitutes so that three...

Suppose in a particular production process that capital and labor are perfect substitutes so that three units of labor can always be substituted for one unit of capital. If the price of capital is $4 per unit and the price of labor is $1 per unit, the firm should employ only capital to minimize the cost of producing its output level.

a. True

b. False

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Answer #1

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Given statement is  

Suppose in a particular production process that capital and labor are perfect substitutes so that three units of labor can always be substituted for one unit of capital. If the price of capital is $4 per unit and the price of labor is $1 per unit, the firm should employ only capital to minimize the cost of producing its output level.

b. False

Reason -

Suppose in a particular production process that capital and labor are perfect substitutes so that three units of labor can always be substituted for one unit of capital. If the price of capital is $4 per unit and the price of labor is $1 per unit, the firm should employ labor only

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