A publishing house is using 400 printers and 200 printing presses to produce books.The printers' wage rate is $20 and the price of a printing press is $100.The last printer added 20 books to total output,while the last printing press added 50 books to total output.The publishing house
A)is using the cost-minimizing combination of printers and printing presses.
B)should use more printers because they are cheaper than printing presses.
C)should use more printing presses because they are more productive than printers.
D)could produce the same number of books at a lower cost by using more printing presses and fewer printers.
E)could produce the same number of books at a lower cost by using more printers and fewer printing presses.

Question

Quizplus · Accepted Answer

To determine the cost-minimizing combination of printers and printing presses, we need to compare the marginal cost of each input. The last printer added 20 books to the total output, so the marginal cost of the last printer is $20/20 = $1 per book. The last printing press added 50 books to the total output, so the marginal cost of the last printing press is $100/50 = $2 per book.

Since the marginal cost of the last printer is lower than the marginal cost of the last printing press, the publishing house should use more printers and fewer printing presses to produce the same number of books at a lower cost. Therefore, the answer is E.

A Publishing House Is Using 400 Printers and 200 Printing