Specialty Steel has carefully measured production in its new plant to determine whether it is technically efficient in production. It has found that, for its two inputs K and L, it has the following marginal products: MP_K = 15 units and MP_L = 22 units. The inputs are hired in perfectly competitive markets, and the firm faces input costs of P_K = $7.50 and P_L = $10 per unit. You have been hired as a consultant to assist Specialty in increasing profitability. What do you recommend about production planning? Explain.

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The Answer of Specialty Steel has carefully measured production in its new plant to determine whether it is technically efficient in production. It has found that, for its two inputs K and L, it has the following marginal products: MP_K = 15 units and MP_L = 22 units. The inputs are hired in perfectly competitive markets, and the firm faces input costs of P_K = $7.50 and P_L = $10 per unit. You have been hired as a consultant to assist Specialty in increasing profitability. What do you recommend about production planning? Explain.

Specialty Steel Has Carefully Measured Production in Its New Plant