The marginal products of capital (MPK) and labor (MPL) are, respectively, MPK = 2000 units; MPL = 1500 units. The input prices are: PK = $10/unit; and PL = $150/unit. To minimize production costs, the firm should   A. increase both capital and labor B. decrease both capital and labor C. increase capital; decrease labor D. decrease capital; increase labor E. do nothing; costs are minimized

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 3.9P
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The marginal products of capital (MPK) and labor (MPL) are, respectively, MPK = 2000 units; MPL = 1500 units. The input prices are: PK = $10/unit; and PL = $150/unit. To minimize production costs, the firm should

 
  • A.

    increase both capital and labor

  • B.

    decrease both capital and labor

  • C.

    increase capital; decrease labor

  • D.

    decrease capital; increase labor

  • E.

    do nothing; costs are minimized

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