This time I have a marginal productivity type question that I have no idea on how to even begin. Help please.
The marginal produtivity of labor is 3 locks per hour of labor, while the marginal productiity of capital is .4 locks per dollar of capital.
a) If labor is costing $15/hour, how should the firm go about expanding, by using labor or using capital?
b) When would you stop adding the factor you chose?
Clueless folks. I have no idea on what to do here and if I did I am not sure how my calculations would be used to answer the questions.
The marginal produtivity of labor is 3 locks per hour of labor, while the marginal productiity of capital is .4 locks per dollar of capital.
a) If labor is costing $15/hour, how should the firm go about expanding, by using labor or using capital?
b) When would you stop adding the factor you chose?
Clueless folks. I have no idea on what to do here and if I did I am not sure how my calculations would be used to answer the questions.