Currently, the wage rate is $5 per worker hour, and the price of capital is $10 per machine hour. If the marginal productivity of labor is 7 units per hour and the marginal productivity of capital is 9 units per hour, how should a cost-minimizing firm adjust its input mix, assuming that it does not want to increase output?

Question

Marilyn Roberts

Business

16 September, 13:21

Currently, the wage rate is $5 per worker hour, and the price of capital is $10 per machine hour. If the marginal productivity of labor is 7 units per hour and the marginal productivity of capital is 9 units per hour, how should a cost-minimizing firm adjust its input mix, assuming that it does not want to increase output?

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Answers (1)

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Hadley · Answer 1

here you go

Explanation:

After a drop in the prices of capital inputs, labor accountants for a lager portion of a firm's factor costs ... The elasticity of demand for labor will be more elastic when ... had been utilizing only the labor of qualified US workers at a wage rate of $37 per hour.