A company uses 20 work units and 30 units of capital to produce 4,000 units of p
ID: 1193324 • Letter: A
Question
A company uses 20 work units and 30 units of capital to produce 4,000 units of product. In this combination the marginal product of labor is 50 and the marginal product of capital is 40. The price of labor is $ 30 and the price of capital is $ 20. to.
How much is the MP per dollar of labor and the MP per dollar of capital? The company can raise capital by one unit and reduce how much units of work by keeping costs constant? This (increases or decreases ) the production by how much units? To maximize production company pointed to the cost increase and reduce what until the MRTS is equal to w / r ?
Explanation / Answer
Extracted Information:
Answer:
MPL/PL = MPK/PK
50/30 =40/20
1.66 # 2
Expenditure
20*30 +30*20 =1200
L30 +620 =1200
L =19.33
Ouput = 19.33*50 +31*40
=966.5+1240
=2206.5
Increase in ouput =2206.5-2200
=6.5
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