A firm employs 20 workers at a wage rate of $20 per hour, and 25 units...
A firm employs 20 workers at a wage rate of $20 per hour, and 25 units of capital at a cost of $30 per unit per hour. The marginal product of labor is X, and the marginal product of capital is 3. The firm is producing efficiently given what value of X?
Homework Answers
At the optimal combination of inputs : w/r = MPL/MPK
Here , w= $20 per hour
r = $30 per unit
MPL = X
MPK = 3
20/30 = X/3
X = 2
This implies that the firm is producing efficiently given the value of X that is MPL = 2.
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