Yukon

Business

3 May, 05:16

Sam runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents from a local shop for $15 per day, and surfing instructors, whom he hires for $60 per day. Sam has figured out that the marginal physical product (MPP) of the last instructor hired is 12 lessons, and the MPP of the last board used is 9 lessons. Which of the following statements is correct?

a. Any of these answers may be right, depending on the price of a lesson.

b. Larry could lower his costs without reducing his output if he employed more instructors and used fewer surfboards.

c. Larry could lower his costs without reducing his output if he employed fewer instructors and used more surfboards.

d. Larry currently employs a cost-minimizing combination of surfboards and instructors.