What is the least-cost combination of labor and capital

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Reference no: EM13224785

Units of Capital MP of Capital Units of Labor MP of Labor

0 24 0 11

1 21 1 9

2 18 2 8

3 15 3 7

4 9 4 6

5 6 5 4

6 3 6 1

7 1 7 1/2

8 1 8

Suppose the productivity of capital and labor are as shown in the table is the input of these resources. They sell in a purely competitive market for $1.00 per unit. Both capital and labor are hired under purley competitive conditions at $3 and $1, respectively.

a. What is the least-cost combination of labor and capital the firm should employ in producing 80 units of output?

b. What is the -maximing combination of labor and capital the firm should use? What is the resulting level of output? What is the economic profit? Is this the least costly way of of producing the profit-maximizing output?

Reference no: EM13224785

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