Suppose That the Production of Wheat Requires Two Inputs, Labor

question 163

Multiple Choice

Suppose that the production of wheat requires two inputs, labor and fertilizer.The price of labor is $4.50, and the price of fertilizer is $3.00.A farmer is currently employing the inputs such that the marginal product of labor is 11 and the marginal product of fertilizer is 8.If the farmer is a cost-minimizer, he should

• A)use more labor and less fertilizer.
• B)use more fertilizer and less labor.
• C)use more labor and more fertilizer.
• D)continue using the same amounts of each input.

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Definitions:

Machine-Hours

A measure of production time, indicating the total hours that machines are operational within a set period.

Overhead Cost

Expenses related to the day-to-day operations of a business that aren't directly tied to the production of goods or services.

Materials Handling

The moving, protecting, storing, and controlling of materials and products throughout manufacturing, warehousing, distribution, consumption, and disposal.

Material Moves

The process of transferring physical materials from one location to another within a manufacturing or distribution facility.