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If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is $3, the

Question

1) If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is $3, the

rental price of capital is $6, and the price of output is $1.50, then the firm should

a. Increase output by hiring more labor, more capital, or both.

b. Hold output constant, but hire more labor and less capital.

c. Decrease output by reducing the quantity of capital, reducing the number of units of labor, or both.

d. None of the above is correct.

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