Specialty Steel has carefully measured production in its new plant to determine whether it is technically efficient in production. It has found that, for its two inputs K and L, it has the following marginal products: MPK = 150, and MPL = 25. The inputs are hired in perfectly competitive markets, and the firm faces input costs of PK = $125 and PL = $10 per unit.
You have been hired as a consultant to assist Specialty Steel in increasing profitability. What do you recommend? Explain
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