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Assume a firm currently employs 5 units of capital and the capital price is $20 per unit. Also assume that the marginal product of capital
Assume a firm currently employs 5 units of capital and the capital price is $20 per unit. Also assume that the marginal product of capital of the 6thunit of capital would be 5 additional units of output. The price of the product is $5 per unit. In the short run,
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the firm should continue to employ exactly 5 unit of capital.
the firm should employ the 6thunit of capital.
the firm should not employ the 6thunit of capital.
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