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trapecia [35]
3 years ago
15

A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $12 per hour and capi

tal is rented at $8 per hour. If the marginal product of labor is 60 units of output per hour and the marginal product of capital is 45 units of output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process
Business
1 answer:
Tom [10]3 years ago
7 0

Answer:

The firm should decrease the amount of capital used.

Explanation:

The wage rate is $12 per hour and capital is rented at $8 per hour.

The marginal product of labor is 60 units of output per hour and the marginal product of capital is 45 units of output per hour.

A manager hires labor and rents capital equipment in a very competitive market.

The ratio of marginal product of labor and wage rate

= \frac{60}{12}

= 5

The ratio of marginal product of capital and rent

= \frac{45}{8}

= 5.625

Since the ratio is greater for capital, it means that the manager should decrease the amount of capital used in the production process.

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7 0
3 years ago
Read 2 more answers
. Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that origi
N76 [4]

Answer: $1,200,000

Explanation:

The firm should include $1,200,000 as the cost of the Manufacturing facility for a new project in it's analysis.

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4 0
3 years ago
Suppose Mary is in consumer equilibrium. The marginal utility of good A is 30, and the price of good A is $2.. . a. if the price
zimovet [89]
 Using formula: Marginal Utility=Change in Total Utility/Change in Quantity
<span>So, the marginal utility of each good will be 30/$2, or 15/$1.
Multiply this marginal utility by the price of each good/service to obtain the marginal utility per unit of good.</span>
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3 years ago
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Answer:

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7 0
3 years ago
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