Alex carrie runs a surfing school on the north shore of Oahu. He has two inputs:

Question

Alex carrie runs a surfing school on the north shore of Oahu. He has two inputs: Surfboards, which he rents from a local shop for $12 per day, and surfing instructors, whom he hires for $50 per day. Alex has figured out that the marginal revenue product (MRP) of the last instructor hired is $1,500, and the MRP of the last board used is $600.

Which of the following statements is correct?

A. Alex currently employs the optimal combination of surfboards and instructors.

B. Alex will optimize his input combination if he employs more instructors and uses fewer surfboards.

C.Alex will optimize his input combination if he employs fewer instructors and uses more surfboards.

Explanation / Answer

C.Alex will optimize his input combination if he employs fewer instructors and uses more surfboards.

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