A Firm Has a Cobb-Douglas Production Function for Its Inputs

question 15

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) MP_K = MP_L
• B) MP_K = 2MP_L
• C) MP_L = 2MP_K
• D) MP_L = .5MP_K

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