Explore BrainMass
Share

Explore BrainMass

    Relative Cost of Labor and Capital: Able Corporation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    At present Able Corporation has (in relative terms):
    Marginal Product of Labor = 30
    Total Cost of Labor = 15
    Marginal Product of Capital = 60
    Total Cost of Capital = 20.

    1. Is Able Corporation currently operating at its lowest possible cost? _____________

    2. Why, or why not? _____________________________________________________

    To achieve the Equimarginal Criterion, Able Corporation would have to:

    3. Raise / Lower (delete one) the Relative Total Cost of Labor to: ________________

    4. Raise / Lower (delete one) the Relative Total Cost of Capital to: _______________

    5. Once done the MPL/CL would be: __________ and the MPK/CK would be: _____________

    © BrainMass Inc. brainmass.com October 10, 2019, 4:25 am ad1c9bdddf
    https://brainmass.com/economics/labour-economics/relative-cost-of-labor-and-capital-able-corporation-459642

    Attachments

    Solution Preview

    At present Able Corporation has (in relative terms):
    Marginal Product of Labor = 30
    Total Cost of Labor = 15
    Marginal Product of Capital = 60
    Total Cost of ...

    Solution Summary

    This solution uses calculations of the relative costs of labor and capital to determine whether Able Corporation is operating at its lowest possible cost, and to give recommendations on how the firm can optimize its resources.

    $2.19