A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital isrented at $1 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units ofoutput per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process?O The firm should decrease capital.O The firm should leave capital unchanged.O The firm should increase capital.

Wage rate = $7 / hour Capital = $11 / hour Marginal product of labor = 65 units Ratio of marginal…

Answered: A manager hires labor and rents capital…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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