Question
A firm employs 100 workers at a wage rate of $10 per hour, and 50 units of capital at a rate of $21 per hour.
A firm employs 100 workers at a wage rate of $10 per hour, and 50 units of capital at a rate of $21 per hour. The marginal product of labour is 2, and the marginal product of capital is 5. The firm
A.
could increase its output at no extra cost by employing more capital and less labour.
B.
could reduce the cost of producing its current output level by employing more capital and less labour.
C.
is producing its current output level at the minimum cost.
D.
could reduce the cost of producing its current output level by employing more labour and less capital.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started