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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?

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    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