Least Cost Method: *Remember the least cost method is a lot like the utility maximizing rule from chapter one. However, here we will make sure that we follow this formula: Marginal Product of Labor/Price of Labor = Marginal Product of Capital/Price of Capital If this ends up being equal then they are using the optimal number of employees and capital (machines), If one is greater then the business would want to use that one more until the numbers become equal. 6)ABC company is using labor and capital to build widgets The last employee produced 20 more widgets and their wage was $10 per hour. The last unit of capital produced 40 more and cost $20. Use the least cost method formula above to state if they are using the least cost Method of production. If they aren't using the least cost method should they use more workers or machines?? Show work 7)ABC company is using labor and capital to build computers. The last employee produced 40 more computers and their wage was $10 per hour. The last unit of capital produced 100 more and its cost was $20 to use. Use the least cost method formula above to state if they are using the least cost method of production. If they aren't using the least cost method should they use more workers or machines?
Least Cost Method: *Remember the least cost method is a lot like the utility maximizing rule from chapter one. However, here we will make sure that we follow this formula: Marginal Product of Labor/Price of Labor = Marginal Product of Capital/Price of Capital If this ends up being equal then they are using the optimal number of employees and capital (machines), If one is greater then the business would want to use that one more until the numbers become equal. 6)ABC company is using labor and capital to build widgets The last employee produced 20 more widgets and their wage was $10 per hour. The last unit of capital produced 40 more and cost $20. Use the least cost method formula above to state if they are using the least cost Method of production. If they aren't using the least cost method should they use more workers or machines?? Show work 7)ABC company is using labor and capital to build computers. The last employee produced 40 more computers and their wage was $10 per hour. The last unit of capital produced 100 more and its cost was $20 to use. Use the least cost method formula above to state if they are using the least cost method of production. If they aren't using the least cost method should they use more workers or machines?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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#7 please
Transcribed Image Text:Least Cost Method:
*Remember the least cost method is a lot like the utility maximizing rule from chapter one.
However, here we will make sure that we follow this formula:
Marginal Product of Labor/Price of Labor = Marginal Product of Capital/Price of Capital
If this ends up being equal then they are using the optimal number of employees and capital
(machines), f one is greater then the business would want to use that one more until the
numbers become equal.
6)ABC company is using labor and capital to build widgets The last employee produced 20
more widgets and their wage was $10 per hour. The last unit of capital produced 40 more and
cost $20. Use the least cost method formula above to state if they are using the least cost
Method of production. If they aren't using the least cost method should they use more workers
or machines?? Show work
7)ABC company is using labor and capital to build computers. The last employee produced 40
more computers and their wage was $10 per hour. The last unit of capital produced 100 more
and its cost was $20 to use. Use the least cost method formula above to state if they are using
the least cost method of production. If they aren't using the least cost method should they use
more workers or machines?
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