The long run. A chair manufacturer hires its assembly-line labour for $25 an hour and calculates that the rental cost of its machinery is $100 per hour. Suppose that a chair can be produced using 4 hours of labour or machinery in any combination. The firm is currently using 2 hours of labour for every two hours of machine time. (Assume that labour is on the horizontal axis and capital is on the vertical axis). 1. Therefore, the firm [ Select ] IS currently minimizing its costs of is not production because: . a) the ratio of MPL to the MPK is equal to the ratio of the wage to the rental cost. True [ Select ] False . b) the ratio of MPL to the MPK is greater than the ratio of the wage to the rental cost. [ Select ] True False . c) MRTSLK is less than the ratio of the wage to the rental cost. [ Select ] True False . d) the MPL divided by the wage is greater than the MPK divided by the rental cost. [ Select ] True False True . e) MRTSLK equals the ratio of input prices. [Select ) False more 2. To minimise the cost of production, the firm should use [ Select ] less labour more the same amount of and [ Select ] less capital. the same amount of 3. Graphically illustrate your answer by drawing an isoquant, an isocost line for the current combination of labour and capital and an isocost line for the optimal combination of labour and capital. a vertical line a horizontal line . An isocost corresponding to theoptimal combination of labour and capital an upward sloping curve which is not a straight line an downward sloping straight line o is [ Select ] an downward sloping curve which is not a straight line -shaped o has slope [ Select ] at the optimal combination of inputs -5, -4, -2, -1, -0.5, -0.25, -0.2, 0, none . An isoquant corresponding to the optimal combination of labour and capital a vertical line o is [ Select ] a horizontal line an upward sloping straight line an upward stoping curve which is not a straight line an downward sloping straight line o has slope [ Selectshaped an downward sloping curve which is not a straight line at the optimal combination of inputs -5, -4, -2, -1, -0.5, -0.25, -0.2, 0, none