A bottling company uses two inputs to produce bottles of the soft drink Sludge: bottling machines (K) and workers (L). The isoquants have the usual smooth shape. The machines cost $1,000 per day to run (r), and the workers earn $200 per day (w). At the current level of production, the marginal product of machines (MP Subscript Upper K) is an additional 134 bottles per day, and the marginal product of labor (MP Subscript Upper L) is 83 more bottles per day. Is this firm producing at minimum cost? If it is minimizing cost, explain why. If it is not minimizing cost, explain how the firm should change the ratio of inputs it uses to lower its cost. The bottling company
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A bottling company uses two inputs to produce bottles of the soft drink Sludge: bottling machines (K...
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