You have been hired to replace the manager of a firm that uses only two inputs, capital
and labor, to produce output. The firm can hire as much labor as it wants at a wage
of $5 per hour and can rent as much capital as it wants at a price of $50 per hour. After
you look at the company books, you learn that the company has been using capital and
labor in amounts that imply a marginal product of labor of 50 and a marginal
product of capital of 100. Use the cost minimizing input rule to explain what action you should take.© BrainMass Inc. brainmass.com October 10, 2019, 1:53 am ad1c9bdddf
MPL=50; Cost of labor=$5
MPC=100; Cost of Capital = $50
MPL/Cost of ...
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