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A company uses two variable inputs, labor (L) and materials (M), to produce its output. At the company's current level of output:
CL = $10 / unit MPL = 25
CM = $2 / unit MPM = 4
a) Determine whether the firm is operating efficiently, given that its objective is to minimize the cost of producing the given the level of output.
b) Determine what changes (if any) in the relative proportions of labor and materials are needed to operate efficiently.
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