Cost of producing the current level of output

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Reference no: EM131244430

A firm uses steel and aluminum to produce auto parts. The current input mix used by the firm is such that the marginal product of aluminum is equal to 800 units, while the marginal product of steel is equal to 500 units. The price of aluminum is $160 per unit and the price of steel is $125 per unit.

Using only the definition provided in response to question 4 above, please show:

(a) how this firm could reduce its cost of producing the current level of output, and

(b) by how much this firm could reduce its cost of producing the current level of output.

Reference no: EM131244430

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