A Firm Has a Cobb-Douglas Production Function for Its Inputs $M P _ { K } = M P _ { L }$

question 11

Multiple Choice

A firm has a Cobb-Douglas production function for its inputs of capital and labor. The firm is currently paying $10 per labor hour and $5 per machine hour. The firm is currently at an efficient production level, employing an equal number of machines and workers. What can we infer about the marginal productivities of capital and labor at this point?

• A) \(M P _ { K } = M P _ { L }\)
• B) \(M P _ { K } = 2 M P _ { L }\)
• C) \(M P _ { L } = 2 M P _ { K }\)
• D) \(M P _ { L } = .5 M P _ { K }\)

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Definitions:

Clutch System

Refers to the components that engage and disengage the engine's power transmission to the gearbox in a vehicle.

PCM

Powertrain Control Module, an automotive component that manages various aspects of an engine's operation, including the fuel mixture, ignition timing, and emissions control.

Shift Solenoids

Electromechanical valves that control the flow of fluid in automatic transmissions, thereby managing gear shifts.

Gear Ratios

The ratio of the rotational speeds of two or more interlocking gears.