Minimize the cost of producing the given quantity of output

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Reference no: EM131092963

You are an efficiency expert hired by a firm in the clothing industry that uses machines (K) and workers (L) as inputs. The firm has estimated that the marginal product of labor is MPL = 120 - 4 L, while the marginal product of capital is MPK = 50 - 5 K. The firm is currently using 25 units of L and 7 units of K. If w = $20, r = $15 then:

1. the firm is minimizing the cost of producing the given quantity of output.

2. the firm should use less L and more K to minimize the cost of producing the given quantity of output.

3. the firm should use less K and more L to minimize the cost of producing the given quantity of output

4. the firm is profit maximizing but not cost minimizing

Reference no: EM131092963

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