The wage rate is $20 per hour and the cost of capital is $30 per hour. At the current output, the firm's MPL is 6units and MPK is 8 units. In order to maximize profit without changing the production level, the firm shouldSelect one:OA.keep its current level of labour and capital inputs.В.rent more capital and hire less labourc.hire less labour and rent less capitalO D.rent less capital and hire more labour

Under the theory of production, a cost minimizer firm produces at a point where the ‘MRTS(marginal…

The wage rate is $20 per hour and the cost of capital is $30 per hour. At the current output, the firm's MPL is 6 units and MPK is 8 units. In order to maximize profit without changing the production level, the firm should

The wage rate is $20 per hour and the cost of capital is $30 per hour. At the current output, the firm's MPL is 6 units and MPK is 8 units. In order to maximize profit without changing the production level, the firm should

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 3.8P

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Question

The wage rate is $20 per hour and the cost of capital is $30 per hour. At the current output, the firm's MPL is 6
units and MPK is 8 units. In order to maximize profit without changing the production level, the firm should
Select one:
OA.
keep its current level of labour and capital inputs.
В.
rent more capital and hire less labour
c.
hire less labour and rent less capital
O D.
rent less capital and hire more labour

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