Q(L, K) 50KEL, where K is capital and L is labour. The marginal products are 趸戈 and MPK = 50() KILi. Suppose that the price of capital increases (and capital is held constant in the production function). What happens to the firm's profit? What happens to the firm's use of labour?

Q(L, K) 50KEL, where K is capital and L is labour. The marginal products are 趸戈 and MPK = 50() KILi. Suppose that the price of capital increases (and capital is held constant in the production function). What happens to the firm's profit? What happens to the firm's use of labour?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 7P

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Q(L, K) 50KEL, where K is capital and L is labour. The marginal products are
趸戈
and MPK = 50() KILi.
Suppose that the price of capital increases (and capital is held constant in
the production function). What happens to the firm's profit? What happens
to the firm's use of labour?

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