Proposals of new production process

Reference no: EM1370154

Your manager comes in with three sets of proposals for a new production process. Each process employs three inputs: land, labor, and capital. Under proposal A, the firm would be producing an output where the MPP of land is 30, labor is 42, and capital is 36. Under proposal B, at the output produced the MPP would be 20 for land, 35 for labor, and 96 for capital. Under proposal C, the MPP would be 40 for land, 56 for labor, and 36 for capital. Inputs' cost per hour is $5 for land, $7 for labor, and $6 for capital.

a. Which proposal would you adopt?

b. If the price of labor rises to $14, how will your answer change?

Reference no: EM1370154

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