Alan's Roast House sells roasted peanuts in a competitive market. The firm employs labor ata wage rate of $6 per hour and rents capital for $15 per hour
At its current level of labor and capital, the marginal product of labor is 12 and the marginal product of capital is 40 . Is the firm currently maximizing profit? Explain.
No, the firm is not currently maximizing profit. The firm should hire labor and capital such that MPL/PL is equal to MPK/PK. In this case, MPL/PL (2) is less than MPK/PK (2.67). Thus, the firm should hire less labor (which would raise MPL) and more capital (which would lower MPK).
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Owners of a corporation have limited liability for the debts of the business.
Answer the following statement true (T) or false (F)
GreenTree Corporation sells live Christmas trees. It observes that when it increases the price of Christmas trees by 10 percent, revenue rises by 25 percent. The demand for Christmas trees is:
A. perfectly elastic. B. elastic. C. inelastic. D. unit elastic.
Refer to the information provided in Table 13.3 below to answer the question(s) that follow. Table 13.3Price ($)Quantity4.001003.502003.003002.504002.005001.506001.00700Refer to Table 13.3. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the most the monopoly would expend in rent-seeking activity?
A. $300 B. $600 C. $900 D. $1,000
If the consumption function is C = 25 + 0.9y and income increases by $100, then savings will increase by
A) $10. B) $25. C) $90. D) $115.