A firm is employing 100 units of labor and 50 units of capital to produce 200 widgets.Labor costs $10 per unit and capital $5 per unit.For the quantities of inputs employed,MP_L = 2 and MP_K = 5.In this situation,the firm: A)is producing the maximum output possible given the prices and relative productivities of the inputs. B)could lower its production costs by using more labor and less capital. C)could increase its output at no extra cost by using more capital and less labor. D)should use more of both inputs in equal proportions.

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The Answer of A firm is employing 100 units of labor and 50 units of capital to produce 200 widgets.Labor costs $10 per unit and capital $5 per unit.For the quantities of inputs employed,MP_L = 2 and MP_K = 5.In this situation,the firm: A)is producing the maximum output possible given the prices and relative productivities of the inputs. B)could lower its production costs by using more labor and less capital. C)could increase its output at no extra cost by using more capital and less labor. D)should use more of both inputs in equal proportions.

A Firm Is Employing 100 Units of Labor and 50