Suppose a firm is currently using 500 laborers and 325 units of capital to produce its product. The

wage rate is $25, and the price of capital is $130. The last laborer adds 25 units to total output, while the

last unit of capital adds 65 units to total output. Is the manager of this firm making the optimal input

choice? Why or why not? If not, what should the manager do?

K=325 r = $130 L= 500 w = 25 MPL = 25 and MPK = 65