Subject - Economics:

Microeconomics

MCQ - 161-4171

Question:

The price of labor is $5 and the price of capital is $10 per unit. Using the table below, what is the least-cost combination of labor and capital that should be hired to produce 18 units of output?
UNITS OF LABOR: 1,MARGINAL PRODUCT OF LABOR: 6,UNITI OF CAPITAL: 1,MARGINAL PRODUCT OF LABOR: 8,
UNITS OF LABOR: 2,MARGINAL PRODUCT OF LABOR: 4,UNITI OF CAPITAL: 2,MARGINAL PRODUCT OF LABOR: 6,
UNITS OF LABOR: 3,MARGINAL PRODUCT OF LABOR: 3,UNITI OF CAPITAL: 3,MARGINAL PRODUCT OF LABOR: 5,
UNITS OF LABOR: 4,MARGINAL PRODUCT OF LABOR: 2,UNITI OF CAPITAL: 4,MARGINAL PRODUCT OF LABOR: 4,
UNITS OF LABOR: 5,MARGINAL PRODUCT OF LABOR: 1,UNITI OF CAPITAL: 5,MARGINAL PRODUCT OF LABOR: 2,

1 Labor and 2 Capital
4 Labor and 8 Capital
2 Labor and 1 Capital
4 Labor and 8 Capital
3 Labor and 2 Capital

Correct Answer: C

Explanation:

Use the least-cost rule of MP_L /$5 = MP_K/$10 to find the optimal combination of labor and capital. There are three combinations of labor and capital where the MPK is twice the MP_L, but only one choice produces 18 units of output. Remember that adding the marginal products provides the total product.

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269 MCQ for effective preparation of the test of Microeconomics of Economics section.

Read the MCQ statement: The price of labor is $5 and the price of capital is $10 per unit. Using the table below, what is the least-cost combination of labor and capital that .... ODUCT OF LABOR: 2, , keenly and apply the method you have learn through the video lessons for Microeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 161-4171.

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