Question

Please select correct answer.

1. Suppose that q = 2K + 4L represents a firm’s production process where K is units of capital, L is units of labor, and q is output. Suppose also that w=1.5r, where w is the price of a unit of labor and r is the price of a unit of capital. Based on this information we know that a cost-minimizing producer will choose to use:

a. Only labor to produce their output.

b. Only capital to produce their output.

c. Two-thirds capital and one-third labor.

d. Two-thirds labor and one-third capital.