A package delivery service uses vans and employees to deliver the maximum number of packages given a fixed budget.The last van added 600 packages to total output,while the last employee added 500 packages.If vans cost $400 per week and employees earn $300 per week,the firm
A)could deliver more packages with the same budget by using more employees and fewer vans.
B)could deliver more packages with the same budget by using more vans and fewer employees.
C)should use more vans and fewer employees because the last dollar spent on vans added more to total output than the last dollar spent on employees.
D)is delivering the maximum number of packages given the fixed budget.
E)both b and c

Question

Quizplus · Accepted Answer

The marginal product per dollar spent on vans is 600 packages/$400 = 1.5 packages per dollar, and for employees, it's 500 packages/$300 = 1.67 packages per dollar. Thus, the firm could deliver more packages by using more vans (since the last van added more packages than the last employee per dollar spent), indicating both B and C are correct.

A Package Delivery Service Uses Vans and Employees to Deliver