A producer is hiring 32 units of labour and 17 units of capital (bundle A). The price of labour is $10, the price of capital is $70. Marginal Product of labour is equal to 160 and Marginal Product of capital is equal to 280. Beginning at A, if the producer decreases expenditures on labour by $1 and increases expenditures on capital by $1, then cost remains constant and output by units. Beginning at A, decreasing capital by one unit enables the producer to hire in output by leads to an The producer should use labour and If MP, equals 80 in equilibrium, then MPK will be units. capital. additional units of labour, which

A producer is hiring 32 units of labour and 17 units of capital (bundle A). The price of labour is $10, the price of capital is $70. Marginal Product of labour is equal to 160 and Marginal Product of capital is equal to 280. Beginning at A, if the producer decreases expenditures on labour by $1 and increases expenditures on capital by $1, then cost remains constant and output by units. Beginning at A, decreasing capital by one unit enables the producer to hire in output by leads to an The producer should use labour and If MP, equals 80 in equilibrium, then MPK will be units. capital. additional units of labour, which

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A producer is hiring 32 units of labour and 17 units of capital (bundle A).
The price of labour is $10, the price of capital is $70.
Marginal Product of labour is equal to 160 and Marginal Product of capital is equal to 280.
Beginning at A, if the producer decreases expenditures on labour by $1 and increases expenditures on capital by $1,
then cost remains constant and output
by
units.
Beginning at A, decreasing capital by one unit enables the producer to hire
additional units of labour, which
leads to an
in output by
units.
The producer should use
labour and
capital.
If MP, equals 80 in equilibrium, then MPK will be

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