Let the marginal product of labor and capital be denoted by MPL and MPK respectively. The price of labor and capital are given by PL and PK respectively. Which of the following equations gives the condition for producing a given level of output at the least cost combination of inputs?
a. PL PK = MPL MPK
b. PL MPL = PK MPK
c. MPL PK = MPK PL
d. PL PK = MPL MPK
Question 2
If the market price of oats is 2.5 per bushel and a farmer decides to sell at 2.8 per bushel, he is likely to sell:
a. more than 5 bushels per day.
b. more than 10 bushels per day.
c. less than 5 bushels per day.
d. 10 bushels per day.
e. nothing.
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