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Question
Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per -unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should
A) use relatively more labor.
B) use relatively less labor.
C) increase all inputs proportionately.
D) decrease all inputs proportionately.
Answer
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Related questions
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