Give an answer with an explanation, and give Correct and incorrect option explanation A firm finds that it currently has a marginalproduct of labor of 2 and a marginal product ofcapital of 4. The wage rate is $5, and the rentalrate is $10. Both labor and capital havediminishing marginal returns. Which of thefollowing statements is true?Select one:a.Cannot be determined given theinformation.b. They have minimized their costsproducing that level of output.c. They could produce the same amountof output at a lower total cost by usingmore capital and less labor.d. They could produce the same amountof output at a lower total cost by usingmore labor and less capital.

We are furnished with a scenario including a firm's use of labor and capital to deliver output. The…

A firm finds that it currently has a marginal product of labor of 2 and a marginal product of capital of 4. The wage rate is $5, and the rental rate is $10. Both labor and capital have diminishing marginal returns. Which of the following statements is true? Select one: Cannot be determined given the information. b. They have minimized their costs producing that level of output. c. They could produce the same amount of output at a lower total cost by using more capital and less labor. d. They could produce the same amount of output at a lower total cost by using more labor and less capital.

A firm finds that it currently has a marginal product of labor of 2 and a marginal product of capital of 4. The wage rate is $5, and the rental rate is $10. Both labor and capital have diminishing marginal returns. Which of the following statements is true? Select one: Cannot be determined given the information. b. They have minimized their costs producing that level of output. c. They could produce the same amount of output at a lower total cost by using more capital and less labor. d. They could produce the same amount of output at a lower total cost by using more labor and less capital.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Give an answer with an explanation, and give Correct and incorrect option explanation

A firm finds that it currently has a marginal
product of labor of 2 and a marginal product of
capital of 4. The wage rate is $5, and the rental
rate is $10. Both labor and capital have
diminishing marginal returns. Which of the
following statements is true?
Select one:
a.
Cannot be determined given the
information.
b. They have minimized their costs
producing that level of output.
c. They could produce the same amount
of output at a lower total cost by using
more capital and less labor.
d. They could produce the same amount
of output at a lower total cost by using
more labor and less capital.

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