False
The production function: Q = 2L + 3K
The price of capital (r): 6
The price of labor: 4
We need to compare the marginal products per dollar for labor and capital.
Marginal Product of Labor (MPL) is the additional output from an additional unit of labor. In the production function Q = 2L + 3K, MPL is the coefficient of L, which is 2.
Marginal Product of Capital (MPK) is the additional output from an additional unit of capital. In the same function, MPK is the coefficient of K, which is 3.
Marginal Product per Dollar for Labor is calculated as MPL divided by the price of labor. Therefore, it is 2 (MPL) / 4 (Price of Labor) = 0.5.
Marginal Product per Dollar for Capital is calculated as MPK divided by the price of capital. So, it is 3 (MPK) / 6 (Price of Capital) = 0.5.
Since the marginal product per dollar for both labor and capital is the same (0.5), the firm should be indifferent between hiring an additional unit of labor or an additional unit of capital for producing its target output, given these prices.
