Question
Roberta runs a dress factory. She produces 100 dresses per day, using labor and electricity. She uses a combination of labor and electricity that produces
Roberta runs a dress factory. She produces 100 dresses per day, using labor and electricity. She uses a combination of labor and electricity that produces 100 dresses per day in the cheapest possible way. She can hire as much labor as she wants at a cost of 10 cents per minute. She can use as much electricity as she wants at a cost of 20 cents per minute. Her production isoquant exhibits diminishing marginal rate of technical substitution without any kinks and she uses positive amount of both inputs. Which of the following statements is true?
a.There is not enough information to determine the ratio of marginal products. We'd need to know the production functinon to determine that.
b.At the cost-minimizing input combination, the marginal product of a minute of labor is twice the marginal product of a kilowatt-hour of electricity.
c.At the cost-minimizing input combination, the marginal product of a kilowatt-hour of electricity is twice the marginal product of a minute of labor.
d.At the cost-minimizing input combination, the marginal product of a minute of labor is equal to the marginal product of a kilowatt-hour of electricity.
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