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Suppose you are the production manager for Widgets, Inc. Your job is to produce a fixed amount of output at the lowest cost possible. When you take over the position, you find that the price paid for a unit of labor is $20 (W = $20), and the price paid for a unit of capital is $50 (R = $50). You also discover that with the current mix of capital (K) and labor (L), the marginal product of labor is 10 (MPL = 10) and the marginal product of capital is 20 (MPK = 20). Is your company minimizing cost? If not, how could you change inputs to do so? Use a diagram to help explain your answer.
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Sally's Silk Screning produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event its
Suppose you are the production manager for Widgets, Inc. Your job is to produce a fixed amount of output at the lowest cost possible. When you take over the position, you find that
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