A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital is rented at $11 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units of output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process? O The firm should leave capital unchanged. O The firm should increase capital. O The firm should decrease capital.
A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital is rented at $11 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units of output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process? O The firm should leave capital unchanged. O The firm should increase capital. O The firm should decrease capital.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
Problem 3CQQ
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![A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital is
rented at $11 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units of
output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process?
O The firm should leave capital unchanged.
O The firm should increase capital.
O The firm should decrease capital.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb0f4bab-4f32-4fca-9ced-04b298ae980f%2F010a7704-22fd-4506-834e-d05976fbcf15%2F5eidv7g_processed.png&w=3840&q=75)
Transcribed Image Text:A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital is
rented at $11 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units of
output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process?
O The firm should leave capital unchanged.
O The firm should increase capital.
O The firm should decrease capital.
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