Suppose a firm is currently using 500 laborers and 325 units of capital to produce its product.
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Suppose a firm is currently using 500 laborers and 325 units of capital to produce its product. The wage rate is $25, and the price of capital is $130. The last laborer adds 25 units to total output, while the last unit of capital adds 65 units to total output. Is the manager of this firm making the optimal input choice? Why or why not? If not, what should the manager do?
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Answer Given Labor L 500 Capita K 325 Wages W 25 Rent R 130 Marginal Product of Labor MPL 25 ...View the full answer
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Arpit Bhargava
I completed Masters in Economics in 2017 from TERI School of advance studies. During my post-graduation I got opportunities to write literature reviews, term papers as well as a thesis on Air pollution in Delhi. My key interest areas are economics, econometrics and multivariate analysis. As far as my teaching experience is concerned, I have been tutoring on online platforms like chegg, coursehero etc for the past few years.
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Related Book For 
Managerial Economics Foundations of Business Analysis and Strategy
ISBN: 978-0078021909
12th edition
Authors: Christopher Thomas, S. Charles Maurice
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