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.

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Chapter1: Making Economics Decisions
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3. Understanding the least-cost rule
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?
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.
Transcribed Image Text:3. Understanding the least-cost rule 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? 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.
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