A company uses two variable inputs, materials (M) and labor (L), to form its output. At the company's current level of output:
CM = $2 / unit MPM = 4
CL = $10 / unit MPL = 25
1. Calculate whether the firm is operating efficiently, given that its objective is to minimize the cost of producing the given the level of output.
2. Calculate what changes in the relative proportions of labor and materials are needed to operate efficiently.