If the ratio of the marginal product of labor to the marginal product of land is 1:3,a firm making an optimal input combination should
A) employ three times as many workers as land units.
B) employ one-third as many workers as land units.
C) pay each worker three times as much as the price of a unit of land.
D) pay each worker one-third as much as the price of a unit of land.
E) use the same number of workers as units of land and pay each worker the same price as a unit of land.

Question

Quizplus · Accepted Answer

The correct answer is based on the principle of cost minimization in production, where the ratio of the marginal products (MP) of inputs should equal the ratio of their prices for an optimal input combination. If the MP of labor to land is 1:3, to minimize costs, a firm should pay each worker one-third as much as the price of a unit of land, ensuring the cost per unit of output is minimized across inputs.

If the Ratio of the Marginal Product of Labor to the Marginal