Question 29 (1 point) Assume that an appliance manufacturer is employing variabl

Question

Question 29 (1 point) Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60 respectively. Resource X can be hired at $50 per unit and resource Y at $20 per unit. The firm: should hire more of both X and Y should hire more of Y and less of X is producing with the least-costly combination of X and Y,but could increase its profits by employing more of X and less of Y is using the least-cost combination of X and Y, but could increase its profits by employing less of both X and Y

Explanation / Answer

Option 3) is producing with least costly combination of X and Y , but could increase its profits by employing more x and less y.

at equilibrium

MRPx/MRPy = wx/wy

from the question, we have 100/6< 50/20

which means hat MRPx/wx > MRPy/wy

this in order to obtain equilibrium, x must be increased and y must be decreased.

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