A perfectly competitive firm may maximize profit by choosing factors of production instead of output: rKwLKLpfKL...

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A perfectly competitive firm may maximize profit by choosing factors of production instead of output: rKwLKLpfKL --),(max, The firm chooses labor and capital such that P*MPL = w; P*MPK = r. Assume wage rate (w) is $ 24 per hour, rent rate (r) is $8.00 per hour, the marginal cost of capital is $2, and average product labor (APL) is $3. i. What is the marginal product of capital (MPK)? ii. What is the marginal value product of labor? (2 points) iii. What is the output price? iv. What is the marginal product of labor (MPL)? (2 points) v. Calculate the average variable cost of labor (AVCL) (2 points) vi. Calculate the slope of its isoquant at the profit-maximizing combination of labor and capital. A perfectly competitive firm may maximize profit by choosing factors of production instead of output: rKwLKLpfKL --),(max, The firm chooses labor and capital such that P*MPL = w; P*MPK = r. Assume wage rate (w) is $ 24 per hour, rent rate (r) is $8.00 per hour, the marginal cost of capital is $2, and average product labor (APL) is $3. i. What is the marginal product of capital (MPK)? ii. What is the marginal value product of labor? (2 points) iii. What is the output price? iv. What is the marginal product of labor (MPL)? (2 points) v. Calculate the average variable cost of labor (AVCL) (2 points) vi. Calculate the slope of its isoquant at the profit-maximizing combination of labor and capital.

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