Question: Consider point E in the figure below. At point E, is MPk/r greater or less than MPL/w ? How do you know? Use this inequality

Consider point E in the figure below. At point E, is MPk/r greater or less than MPL/w ? How do you know? Use this inequality to explain how the firm can increase output without increasing total costs by using a different combination of inputs. Capital TCar TCar LD Expansion path TCIr B K2 E A 106 103 O TCW Labor TCW (b)

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