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# Is the firm minimizing costs? What steps can lower costs?

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A firm uses two variable inputs, labor, L, and raw materials, M, with typically shaped isoquants. It pays \$20 per hour for L and \$5 per unit for M. At the current mix of L and M, the marginal products of L and M are:

MPL = 20

MPM = 4

Is the firm minimizing costs? If not, what steps should it take to lower costs and still produce the same level of output?

https://brainmass.com/economics/output-and-costs/firm-minimizing-costs-steps-lower-costs-486441

#### Solution Preview

Because we have:

20/5 = 4, the firm is not minimizing cost. If the firm decreases L from the current level of 20, it will minimize costs to ...

#### Solution Summary

This solution addresses the following economics question:

A firm uses two variable inputs, labor, L, and raw materials, M, with typically shaped isoquants. It pays \$20 per hour for L and \$5 per unit for M. At the current mix of L and M, the marginal products of L and M are:

MPL = 20

MPM = 4

Is the firm minimizing costs? If not, what steps should it take to lower costs and still produce the same level of output?

\$2.19