Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60 respectively. Resource X can be hired at $50 per unit and resource Y at $20 per unit. The firm:
A. should hire more of both X and Y.
B. should hire more of Y and less of X.
C. is producing with the least-costly combination of X and Y but could increase its profits by
employing more of X and less of Y.
D. is using the least-cost combination of X and Y but could increase its profits by employing
less of both X and Y.
Ans: A. should hire more of both X and Y.
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