Carolyn S.

asked • 07/15/13

Econ 101 help.

The optimization rule in the short run, a firm will increase the variable factor up the point at which its MRP (MRxMP) is equal to the price of the input (MRP for labor=P for labor=wage rate). A firm finds that the MP of capital is 60 units and the MP of labor is 20 units. If the price of capital is $6 and the price of labor is $2.50, how should the firm adjust its mix of capital and labor? What would be the result?

1 Expert Answer

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Phil J. answered • 09/04/13

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