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5. (40 points possible) Assume a perfectly competitive firm has a production process with the following marginal physical productivities: MPPL = 0.5 - L''5 -

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5. (40 points possible) Assume a perfectly competitive firm has a production process with the following marginal physical productivities: MPPL = 0.5 - L''5 - Ko'zsandMPPK = 0.25 - L'5 - K"75 .The input prices are w = $2 and r = $1. The market price for output is P = $8. 0 How much of each input will the firm use? Show your algebraic work and illustrate your discussion with the relevant applicabie diagram(s)

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