Question

You own a bagel shop that uses capital and labor in its production process. you recently realized that your marginal product per dollar for capital is larger than your marginal product per dollar for labor. what should you do to increase profit? you should increase the amount of capital you are using you should increase the amount of labor you are using you are already maximizing profit so you should not make any changes you should hire more capital and more labor to increase profit

Answer 1

To increase your profit, you should increase the amount of capital your are using. This way it will be a chain-reaction of decisions, where you will be able to hire more people to do your labor and help you produce more goods for your company. Though the increase rate in capital will continue, the gains will increase and the business will eventually experience an equilibrium at some point. This depends if the products have been sold successfully to the market.