You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 20, and MPK = 40 the firm:

A. is profit maximizing but not cost minimizing.
B. is cost minimizing.
C. should use less L and more K to cost minimize.
D. should use more L and less K to cost minimize.

Answer: D

Economics

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