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Assume a competitive firm faces a fixed wage rate of $4 and a fixed price per unit of capital of $2. If the marginal physical
Assume a competitive firm faces a fixed wage rate of $4 and a fixed price per unit of capital of $2. If the marginal physical products of labour and capital are 16 and 6, respectively, then to maximize profits the firm should
Select one:
a.use relatively more capital.
b.use relatively less capital.
c.increase all inputs proportionately.
d.decrease all inputs proportionately.
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