The Price of Capital Is $12 Per Machine-Hour, and the Price

question 144

Multiple Choice

The price of capital is $12 per machine-hour, and the price of labor is $3 per hour. The table gives production schedules for a firm, showing the possible combinations of capital and labor that will produce 100 units of output. Which combination will this cost-minimizing firm choose? $\begin{array}{|c|c|c|c|c|}\hline \text { A } & \text { Labor: } 20 & \text { Capital: 5 } & \text { MPL: 5 } & \text { MPc: } 20 \\\hline \text { B } & \text { Labor: } 10 & \text { Capital: 10 } & \text { MPL : } 10 & \text { MPc: } 10 \\\hline \text { C } & \text { Labor: 5 } & \text { Capital: 20 } & \text { MPL: } 20 & \text { MPc: } 5 \\\hline \text { D } & \text { Labor: 4 } & \text { Capital: 25 } & \text { MPL : 25 } & \text { MPP: } 4 \\\hline\end{array}$

• A) A
• B) B
• C) C
• D) D

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