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Consider a production model with labor and capital inputs. There are constant returns to scale overall....

Consider a production model with labor and capital inputs. There are constant returns to scale overall.

If LaTeX: MPK>r>0M P K > r > 0 and LaTeX: MPL>w>0M P L > w > 0, the firm

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should hire more capital until LaTeX: MPK = 0

has the optimal amount of labor

should get rid of some capital until LaTeX: MPK = r

should get rid of some capital until LaTeX: MPL = r

should hire more capital until LaTeX: MPK = r

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