Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 20

Suppose the Jones Manufacturing Company produces a single product. At its current input mix the marginal product of labor is 10 and the marginal product of capital is 20. The per unit price of labor and capital are $5 and $10, respectively. Is the Jones Company using an optimal mix of labor and capital to produce its current output If not, should it use more capital or labor Explain.