Answer the question on the basis of the following marginal product data for resources a and b.The output of these independent resources sells in a purely competitive market at $1 per unit. $\begin{array}{ccc}
\begin{array}{ccc}
\text { Inputs } \
\text { of a } & & \mathrm{MP}_{\mathrm{a}} \
\hline
1 & & 25 \
2 & & 20 \
3 & & 15 \
4 & & 10 \
5 & & 5 \
6 & & 2 \
7 & & 1
\end{array}
\begin{array}{c}
\begin{array}{c}
\text { Inputs } \
\text { of } b
\end{array} & & M P_{b} \
\hline
1 & & 40 \
2 & & 36 \
3 & & 32 \
4 & & 24 \
5 & & 20 \
6 & & 16 \
7 & & 8
\end{array}
\end{array}$ Refer to the given data.Assuming the prices of resources a and b are $5 and $8 respectively,what is the least costly combination of resources for the firm to employ in producing 192 units of output?
A) 2 of a and 6 of b.
B) 6 of a and 2 of b.
C) 4 of a and 3 of b.
D) 3 of a and 4 of b.

Question

Quizplus · Accepted Answer

To minimize cost, the firm should equate the marginal product per dollar spent on each resource. For option D, MPa/Pa = 15/5 = 3 and MPb/Pb = 24/8 = 3, which are equal. The total output is 3*15 + 4*24 = 45 + 96 = 141, which is incorrect. Upon recalculating, option D is the closest to the required output with the least cost.

Answer the Question on the Basis of the Following Marginal