If the Marginal Physical Product (MPP) of Labor Is 60

question 58

Multiple Choice

If the marginal physical product (MPP) of labor is 60 and the price of labor per period is $20, the MPP of machinery is 75 and the price of the machinery per period is $25, in order to achieve optimal input proportions the firm should use

• A) more labor and less machinery.
• B) more machinery and less labor.
• C) more labor with the same amount of machinery.
• D) the current combination.