7. In figuring out how much capital to use, the firm weighs the cost of that capital...

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7. In figuring out how much capital to use, the firm weighs the cost of that capital against the revenues it will generate through its increased production. The marginal revenue product of capital is a measure of capital value and is equal to the marginal product of capital times the price of the final good. A firm will employ capital until the marginal revenue product of that capital equals the rental rate on capital.

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Principles Of Microeconomics

ISBN: 9780691150093

13th Global Edition

Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster

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