Question

A business is employing labor and capital to pave a road. At the current combination of inputs, the marginal product of labor is 45 square feet per day, and the marginal product of capital is 135 square feet per day. If labor costs $900 per day and capital costs $2,700 per day, the firm should

A hire less labor and more capital

B hire more labor and less capital

C hire less labor and less capital

D hire more labor and more capital

E maintain the current combination

Last time I posted this I was given an answer not on here.

Answer 1

D
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Answer 2

Based on the information given, the correct option will be E. maintain the current combination.

It should be noted that in the equilibrium level, the formula will be:

MPl/L = MPk/k

45/900 = 135/2700

1/20 = 1/20

Therefore, since they're the same, the company should maintain the current combination.

Learn more about equilibrium on:

https://brainly.com/question/24735820