5 Question 5 A bottling company uses two inputs to produce bottles of the soft drink Dr Pibb; bottling machines, K, and workers, L. The firm's production function exhibits diminishing MRTS. At its current level of production, the firm spends 800 per day on machinery and 200 per day paying wages to its workers. At this level of production, the marginal product of the machine is an additional 200 bottles per day and the marginal product of labor is 50 more bottles per day. Is this firm producing at minimum cost? If it is minimizing cost, explain why. If it is not minimizing cost, explain how the firm can lower its cost.

5 Question 5 A bottling company uses two inputs to produce bottles of the soft drink Dr Pibb; bottling machines, K, and workers, L. The firm's production function exhibits diminishing MRTS. At its current level of production, the firm spends 800 per day on machinery and 200 per day paying wages to its workers. At this level of production, the marginal product of the machine is an additional 200 bottles per day and the marginal product of labor is 50 more bottles per day. Is this firm producing at minimum cost? If it is minimizing cost, explain why. If it is not minimizing cost, explain how the firm can lower its cost.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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