A bottling company uses two inputs to produce bottles soft drink sludge: bottling machines (K) and workers(L). The machine costs $1000 per day (r) to run and the workers are paid $200 per day (w). At the current level of production, the marginal product of the machine is an additional 200 bottles per day (MPK), and the marginal product of labor is 50 bottles per day (MPL). a. State the rule for determining the cos- efficient combinations of inputs (K & L) for the production of soft drinks. b. Given r=$1000 per day, w=$200 per day, (MPK)= 200 bottles, and (MPL)= 50 bottles, is the company operating cost-efficiently? c. What must the company do to move toward cost-efficient operation? Hint: use more labor or more machines and why?
4. A bottling company uses two inputs to produce bottles soft drink sludge: bottling machines (K) and workers(L). The machine costs $1000 per day (r) to run and the workers are paid $200 per day (w). At the current level of production, the marginal product of the machine is an additional 200 bottles per day (MPK), and the marginal product of labor is 50 bottles per day (MPL).
a. State the rule for determining the cos- efficient combinations of inputs (K & L) for the production of soft drinks.
b. Given r=$1000 per day, w=$200 per day, (MPK)= 200 bottles, and (MPL)= 50 bottles, is the company operating cost-efficiently?
c. What must the company do to move toward cost-efficient operation? Hint: use more labor or more machines and why?
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