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A firm is producing 1,000.units of output with 40 units of labor and 30 units of capital. The marginal product of
A firm is producing 1,000.units of output with 40 units of labor and 30 units of capital. The marginal product of
the last unit of labor and capital are, respectively, MPL= 60 and MPK =120. The prices of labor and capital are, respectively, w =3= and r = 40.
a. At the combination of inputs the MRTS is ________________( greater than, less than, equal to) the input price ratio, w/r.
b. The firm can increase ____________ by one unit while reducing ______________ by __________ unit(s), and keep output constant. This will reduce cost by $ ___________ .
c. To minimize the cost of producing 1,000 units of output the firm will increase __________ and decrease _________ until __________ equals __________ or, in other words, __________ equal _______.
