You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 4, and MPK = 40 the firm:
A. should use more K and less L to cost minimize.
B. is profit maximizing but not cost minimizing.
C. is cost minimizing.
D. should use less L and more K to cost minimize.
Answer: A
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