Suppose that the marginal revenue product of capital is greater than r*, the interest rate necessary to

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Suppose that the marginal revenue product of capital is greater than r*, the interest rate necessary to induce saving. However, instead of buying more capital, the firm hires more labor. Would this tend to increase or decrease profits? Why?

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Economics An Introduction To Traditional And Progressive Views

ISBN: 9780765616685

7th Edition

Authors: Howard J. Sherman, E. K. Hunt, Reynold F. Nesiba, Phillip A. O'Hara, Barbara A. Wiens-Tuers

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