A firm is employing 100 units of labor and 50 units of capital to produce 200 widgets. Labor costs $10 per unit and capital $5 per unit. For the quantities of inputs employed, MP L = 2 and MP K = 5. In this situation, the firm (A) is producing the maximum output possible given the prices and relative productivities of the inputs. (B) could lower its production costs by using more labor and less capital. (C) could increase its output at no extra cost by using more capital and less labor. (D) should use more of both inputs in equal proportions.

1 mark, −0.33MicroeconomicsProduction and returns to scaleProducer equilibrium and the expansion pathModerateabout 1 min

UoH 2011 Question 24: Production and returns to scale

A firm is employing 100 units of labor and 50 units of capital to produce 200 widgets. Labor costs $10 per unit and capital $5 per unit. For the quantities of inputs employed, MP L = 2 and MP K = 5. In this situation, the firm

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This question is on Producer equilibrium and the expansion path, part of Production and returns to scale in Microeconomics.

The least-cost mix of inputs at given prices and how it moves as output grows.

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IIT JAM 2022 · Q59Let the production function be Q = √(L² + K²), with unit prices of labour and capital Rs. 30 and Rs. 40, and…

Practise Production and returns to scale More on Producer equilibrium and the expansion path

UoH 2011 Question 24: Production and returns to scale

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UoH 2011 Question 24: Production and returns to scale

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