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    Question

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    A a Correct Answer Incorrect Answer
    B b Correct Answer Incorrect Answer
    C c Correct Answer Incorrect Answer
    D d Correct Answer Incorrect Answer

    Solution

    Calculate the marginal product per unit cost for both labor and capital: MPL/w = 2/10 = 0.2 MPK/R = 5/5=1 Since MPK/R>MPL/W ​ , the firm is getting more output per unit of cost from capital than from labor. This means the firm can lower its production costs by using more capital and less labor while maintaining the same level of output.

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