Question
The marginal product of labor is 100 boxes of software and wages are $10 per hour....
The marginal product of labor is 100 boxes of software and wages are $10 per hour. A machine that does the same work rents for $200 per hour and packages 1000 boxes per hour. If the firm is currently producing the amount it wishes, what should it do?
A) Expand labor and reduce capital, the marginal product of capital is greater than the marginal product of labor
B) Expand labor and reduce capital, as capital costs significantly more
C) Expand capital and reduce labor, as the additional output for each dollar spent is greater for capital than labor
D) Expand labor and reduce capital, as the additional output for each dollar spent is greater for labor than for capital
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