Suppose that a firm is using 100 units of labour and 50 units of capital to produce 200 fax machines per day. The price of labour is $10 per unit and the price of capital is $5 per unit. The MPL equals 2 and the MPK equals 5. In this situation,

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the firm is minimizing its costs.

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the firm should increase the use of both inputs.

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the firm could lower its production costs by decreasing labour input and increasing capital input.

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the firm could lower its production costs by increasing labour input and decreasing capital input.

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the firm should decrease the use of both inputs.

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Suppose that a firm is using 100 units of labour and 50 units of capital to prod...

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