Suppose the price of capital and labor remain constant but that the average educational level of workers has increased and therefore, productivity of labor increases. This would lead a firm
A) to adopt a more capital-intensive production technology.
B) to keep its output and production technology unchanged, but to use fewer units of labor.
C) to adopt a more labor-intensive technology.
D) to use only labor to produce the product.
Question 2
Suppose there are economies of scale in the production of a specialized memory chip that is used in manufacturing microwaves. This suggests that the microwave industry is a decreasing-cost industry.
Indicate whether the statement is true or false
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A Production Function with Diminishing Marginal Product of Capital
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