If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is $3, the rental price of capital is $6, and the price of output is $1.50, then the firm should:
a. increase output by hiring more labor, more capital, or both.
b. hold output constant, but hire more labor and less capital.
c. decrease output by reducing the quantity of capital, reducing the number of units of labor, or both.
d. None of the above is correct.
What Is The Marginal Product Of Labor:
The Marginal Product Of Labor is a term used in Economics to help companies make decisions in the short-run based on the current labor market. The Marginal Product Of Labor represents the incremental output for adding an additional worker.
Answer and Explanation: 1
The correct answer is d. None of the above is correct.
Marginal profit per labor = Margin product per labor * price of output - wage rate
= 2*1.5 -...
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fromChapter 3 / Lesson 49
Understand the meaning of marginal product of labor. Learn the marginal product of labor (MPL) formula, its significance, and how to calculate MPL with examples.