Question: Hi can you help me solve this (show all steps if possible) 1. Consider two rms, Stinky and Foul in the same industry who use

Hi can you help me solve this (show all steps if possible)

Hi can you help me solve this (show all steps if possible)

1. Consider two rms, Stinky and Foul in the same industry who use the same production technology. To produce the same level of output, say 1000 pairs of socks, Stinky uses more capital than Foul and Foul uses more labor than Stinky. Suppose both companies pay the same wage to their employees: 11) = 15. (Unless otherwise stated, assume that all rms choose their input levels optimally) (a) (2 points) Which company is paying a lower rent? Why? (b) (1.5 points) Which company has a higher cost? Why? (0) (1.5 points) At their current optimal input bundles, the marginal product of labor is higher for which rm? Why? (d) (1.5 points) At their current optimal input bundles, the marginal product of labor is lower for which rm? Why? (e) (2 points) Circle the correct answer and provide a brief explanation. If the wage rate doubles, rms' costs will MORE THAN / LESS THAN / EXACTLY double

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