CFA Practice Question

CFA Practice Question

Which of the following is incorrect?
A. For a firm that seeks to maximize profits, the ratio of marginal product of skilled labor to price of skilled labor should exceed the ratio of marginal product of unskilled labor to price of unskilled labor.
B. Everything else being equal, the price of a resource used by a firm will increase if the demand for the firm's product increases.
C. The Law of Diminishing Returns implies that the marginal product of a factor of production usually decreases as more of the factor is used.
Explanation: For profit maximization the ratio of MP/P for different inputs should be the same.

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