If MPL/w_L MPK/w_K_,then the firm should produce using: A)less L and less K. B)less L and more K. C)more L and more K. D)more L and less K.

Question

If MPL/w_L> MPK/w_K_,then the firm should produce using: A)less L and less K. B)less L and more K. C)more L and more K. D)more L and less K.

Quizplus · Accepted Answer

The inequality suggests that the marginal product of labor (MPL) is relatively high compared to the marginal product of capital (MPK). This means that the firm should use more labor and less capital in order to maximize output and minimize costs. Therefore, the answer is D, more L and less K.

If MPL/wL > MPK/wK, then the Firm Should Produce Using

If MPL/w_L> MPK/w_K_,then the Firm Should Produce Using