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Marginal revenue product Capital In year 1 In year 2 (Number of electric (dollars per electric (dollars per electric mixers) mixer) mixer) 1 140

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Marginal revenue product Capital In year 1 In year 2 (Number of electric (dollars per electric (dollars per electric mixers) mixer) mixer) 1 140 120 2 130 110 3 115 95 Betty's Bakery is considering the purchase of one, two, or three additional electric mixers. An electric mixer has a life of 2 years and has a price of $200. The table above gives the marginal revenue product of a mixer. After 2 years a mixer is worthless. If the interest rate is 15 percent a year, Betty's buys 1 mixer 3 mixers 2 mixers O mixers

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