Question

Assume that $MP_L = 10$ and $MP_K = 6$. Assume also that $P_L = \$4$ and $P_K = \$2$. The firm should use labor and capital in order to $MP_L$ and $MP_K$, making the firm's rate of substitution the market's rate of substitution.

          Assume that $MP_L = 10$ and $MP_K = 6$. Assume also that $P_L = \$4$ and $P_K = \$2$.
The firm should use  labor and  capital in order to  $MP_L$ and  $MP_K$, making the firm's rate of substitution  the market's rate of substitution.

Assume that MPL = 10 and MPK = 6. Assume also that PL = $4 and PK = $2.
The firm should use labor and capital in order to MPL and MPK, making the firm's rate of substitution the market's rate of substitution.

Added by Miguel G.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Nick Johnson

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The first question is asking whether the options are more or less. However, there are no specific options mentioned in the given statement, so it is not possible to determine whether the options are more or less. Show more…

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Questions 1 & 2: options are more/less... Questions 3 & 4: options are increase/decrease... Question 5: options are more than, less than, or equal to. = $2 The firm should use labor and market's rate of substitution. capital in order to MP and MP, making the firm's rate of substitution