Determine whether the mix of labor and capital is opitmal

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Reference no: EM131159511

A manufacturer of a product reports that the marginal product of labor is 10 units of output per hour of labor and that the marginal product of capital is 2 units of output per unit of capital. the price of labor is $20 and the price of capital is $4. Determine whether the mix of labor and capital is opitmal. That is, indicate whether the ratio of capital to labor should be increased, decreased, or remain unchanged, Justify your answer quantitatively.

Reference no: EM131159511

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