Posted by joy on .
I need to find whether or not the company is making an optimal inout choice.
largo publishing house uses 400 printers and 200 printers to produce books. A printers wage is 20. and the price of a printing press is 5000. the last printer added 20 books to total output while the last press added 1000 books.
am i on the right track
k=c/r-w/r*l or do i use the
macro econ -
The firm makes an optimal input choice when the marginal product of one input divided by the price (wage) is equal the marginal product of any other input divided by the price (wage) of that other input.
So for printers MP=20, P=20. So MP/P=1
For presses, MP=1000, P=5000. So, MP/P=0.2
The firm should hire more printers and use less presses.