3. Understanding the least-cost ruleKevin runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents from a local shop for $15 per day, and surfinginstructors, whom he hires for $50 per day. Kevin has figured out that the marginal physical product (MPP) of the last instructor hired is 20 lessons,and the MPP of the last board used is 3 lessons.Which of the following statements is correct?O Kevih could lower his costs without reducing his output if he employed fewer instructors and used more surfboards.O Kevin could lower his costs without reducing his output if he employed more instructors and used fewer surfboards.Any of these answers may be right, depending on the price of a lesson.O Kevin currently employs a cost-minimizing combination of surfboards and instructors.

When marginal product per dollar is equal among the inputs, the firm achieves cost minimization.

Kevin runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents from a local shop for $15 per day, and surfing instructors, whom he hires for $50 per day. Kevin has figured out that the marginal physical product (MPP) of the last instructor hired is 20 lessons, and the MPP of the last board used is 3 lessons. Which of the following statements is correct? Kevih could lower his costs without reducing his output if he employed fewer instructors and used more surfboards. Kevin could lower his costs without reducing his output if he employed more instructors and used fewer surfboards. Any of these answers may be right, depending on the price of a lesson. OKevin currently employs a cost-minimizing combination of surfboards and instructors.

Kevin runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents from a local shop for $15 per day, and surfing instructors, whom he hires for $50 per day. Kevin has figured out that the marginal physical product (MPP) of the last instructor hired is 20 lessons, and the MPP of the last board used is 3 lessons. Which of the following statements is correct? Kevih could lower his costs without reducing his output if he employed fewer instructors and used more surfboards. Kevin could lower his costs without reducing his output if he employed more instructors and used fewer surfboards. Any of these answers may be right, depending on the price of a lesson. OKevin currently employs a cost-minimizing combination of surfboards and instructors.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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