6. A firm is currently producing 3,000 units of output daily by employing 20 units of...

 

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6. A firm is currently producing 3,000 units of output daily by employing 20 units of labor at a price of $100 per unit and 40 units of capital at a price of $40 per unit. The marginal product of the last unit of labor employed is 50, and the marginal product of the last unit of capital employed is 30. In order to minimize its production costs, the firm should do which of the following? (A) Employ more labor and less capital because the marginal product of labor is greater than the marginal product of capital. (B) Employ less labor and more capital because the firm is currently spending $2,000 on labor and only $1,600 on capital. (C) Employ less labor and more capital because the marginal product per dollar spent on labor is less than the marginal product per dollar spent on capital. (D) Employ more labor and less capital because the firm already employs 40 units of capital and only 20 units of labor. (E) Employ less labor and more capital because a unit of labor costs $100 while a unit of capital costs only $40. Wage WM Market S M Quantity of Labor 6. A firm is currently producing 3,000 units of output daily by employing 20 units of labor at a price of $100 per unit and 40 units of capital at a price of $40 per unit. The marginal product of the last unit of labor employed is 50, and the marginal product of the last unit of capital employed is 30. In order to minimize its production costs, the firm should do which of the following? (A) Employ more labor and less capital because the marginal product of labor is greater than the marginal product of capital. (B) Employ less labor and more capital because the firm is currently spending $2,000 on labor and only $1,600 on capital. (C) Employ less labor and more capital because the marginal product per dollar spent on labor is less than the marginal product per dollar spent on capital. (D) Employ more labor and less capital because the firm already employs 40 units of capital and only 20 units of labor. (E) Employ less labor and more capital because a unit of labor costs $100 while a unit of capital costs only $40. Wage WM Market S M Quantity of Labor

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Explanation This question involves analyzing the costminimization strategy for a firm based on the m... View the full answer