Business, 20.12.2019 05:31 piper64bsj

Afirm produces output with capital and labor. suppose currently the marginal product of labor is 20 and the marginal product of capital is 2. each unity of labor costs $8 and each unity of capital costs $1. is the firm minimizing the cost of production? explain.

let mpk be the marginal product of capital, mpl be the marginal product of labor, r be the proce of capital, w be the cost of labor, and mrts be the marginal rate of technical substitution.

the firm is:

a. not minimizing the cost of production because mrts> mpk/mpl

b. not minimizing the cost of production because mpk/r
c. minimizing the cost of production because mrts = mpk/mpl

d. minimizing the cost of production because mpk/r = mpl/w

e. minimizing the cost of production because mpk/r

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Afirm produces output with capital and labor. suppose currently the marginal product of labor is 20...