MBA firm, one of the firms that retains you as a financial analyst, is considering buying out DBA firm, a small manufacturing firm that is now barely operating at a profit. You recommend the buyout because you believe that new management could substantially reduce production costs, and thereby increase profit to a quite attractive level. You collected the following product information in order to convince the CEO at MBA firm that DBA is indeed operating inefficiently:

MPL = 10 PL = $20

MPK = 15 PK = $15

Explain how these data provide evidence of inefficiency. How could the new manager of DBA firm improve efficiency?