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ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 3.7P
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Assume that a firm has the following factor costs: the rental rate of capital
being 6 and a wage rate of 4. Given the firm's current mix of inputs, the marginal
product of capital is 12 and the marginal product of labour is 18. Is this firm
minimizing its costs of production? If so, explain how you know. If not, explain
what the firm ought to do.
Transcribed Image Text:Assume that a firm has the following factor costs: the rental rate of capital being 6 and a wage rate of 4. Given the firm's current mix of inputs, the marginal product of capital is 12 and the marginal product of labour is 18. Is this firm minimizing its costs of production? If so, explain how you know. If not, explain what the firm ought to do.
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