Output for a Simple Production Process Is Given by Q

question 53

Multiple Choice

Output for a simple production process is given by Q = KL, where K denotes capital and L denotes labor. The price of labor is $10 per unit and the price of capital is $2 per unit. If at the current level of production the marginal product of labor is 4 while the marginal product of capital is 2, then in order to minimize your costs of production you should use

• A)more capital and less labor.
• B)more labor and less capital.
• C)more of both inputs.
• D)the same amount of both inputs.

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