Question: The current wage rate is $ 1 0 , and the rental rate of capital is $ 4 0 0 . A firm's marginal physical
The current wage rate is $ and the rental rate of capital is $ A firm's marginal physical product of labor is and its marginal physical product of capital is Is the firm maximizing profits for the given cost outlay?
Part
A
No The marginal factor cost of labor is not equal to the marginal factor cost of capital.
B
No The marginal physical product of labor per dollar spent on wages is not equal to the marginal physical product of capital per dollar spent on capital.
C
No The marginal physical product of labor is not equal to the marginal physical product of capital.
D
Yes. The firm is maximizing profits.
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