Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Understanding the least - cost rule Paolo runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents
Understanding the leastcost rule
Paolo runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents from a local shop for $ per day, and surfing instructors, whom he hires for $ per day. Paolo has figured out that the marginal physical product MPP of the last instructor hired is lessons, and the MPP of the last board used is lessons.
Which of the following statements is correct?
Paolo currently employs a costminimizing combination of surfboards and instructors.
Paolo could lower his costs without reducing his output if he employed fewer instructors and used more surfboards.
Any of these answers may be right, depending on the price of a lesson.
Paolo could lower his costs without reducing his output if he employed more instructors and used fewer surfboards.
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