Suppose that a firm uses only capital,K,and labor,L,in its production process.At the firm's current long-run combination of capital and labor,it uses positive amounts of both inputs and measures the marginal products as and .The rental rate of capital is r = 6 and the current wage rate for labor is w = 3.The firm
A) is currently minimizing total cost in the long run.
B) could lower cost by increasing the usage of capital and decreasing the usage of labor.
C) could lower cost by increasing the usage of labor and decreasing the usage of capital.
D) cannot lower cost without also lowering the level of output.

Question

Suppose that a firm uses only capital,K,and labor,L,in its production process.At the firm's current long-run combination of capital and labor,it uses positive amounts of both inputs and measures the marginal products as  and  .The rental rate of capital is r = 6 and the current wage rate for labor is w = 3.The firm
A) is currently minimizing total cost in the long run. 
B) could lower cost by increasing the usage of capital and decreasing the usage of labor. 
C) could lower cost by increasing the usage of labor and decreasing the usage of capital. 
D) cannot lower cost without also lowering the level of output.

Quizplus · Accepted Answer

The Answer of Suppose that a firm uses only capital,K,and labor,L,in its production process.At the firm's current long-run combination of capital and labor,it uses positive amounts of both inputs and measures the marginal products as  and  .The rental rate of capital is r = 6 and the current wage rate for labor is w = 3.The firm
A) is currently minimizing total cost in the long run. 
B) could lower cost by increasing the usage of capital and decreasing the usage of labor. 
C) could lower cost by increasing the usage of labor and decreasing the usage of capital. 
D) cannot lower cost without also lowering the level of output.

Suppose That a Firm Uses Only Capital,K,and Labor,L,in Its Production